Southwest Airlines: Weighing The Rewards Against The Risks


  • Travel and entertainment spending rose sharply, and the outlook for airlines seems favorable.
  • The operational problems could be the result of an outdated scheduling system. If these problems persist, consumers may boycott the airline, which could be disastrous for investors.
  • Besides the operational problems, the revenue and profit outlook are bright. The company has also resumed its dividend and the stock’s valuation also looks favorable.
  • Weighing the rewards against the risks, I think Southwest Airlines stock is worth buying.

Holiday Travel Expected To Rise Over 25 Percent Over 2020 Despite COVID-19 Uptick

Alex Wong/Getty Images News


Airline shares can fly high, but they can also land hard. Over the past decade, Southwest Airlines (NYSE:LUV) shares have shown tremendous growth from 2012 to 2018, before stabilizing and taking a nosedive during the

Data by YCharts

Dividend Growth History - LUV ticker page on Seeking Alpha

Dividend Growth History (LUV ticker page on Seeking Alpha )

Southwest Airlines cash flow highlights - SEC and author's own calculation

Southwest Airlines cash flow highlights (SEC and author’s own calculation)

Data by YCharts

Southwest Airlines earnings estimates - LUV ticker page on Seeking Alpha

Southwest Airlines earnings estimates (LUV ticker page on Seeking Alpha)

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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