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MarketScreener Homepage  >  Equities  >  Nyse  >  Southwest Airlines    LUV

SOUTHWEST AIRLINES

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Airline Stocks Buoyed by Easing Travel Restrictions, State Aid

05/26/2020 | 08:58am EST

By Anna Isaac

Global airline stocks rallied following signs of more government support for the aviation sector and the loosening of travel restrictions in some countries.

Shares in Southwest Airlines Co., Delta Air Lines Inc., United Airlines Holdings Inc. and American Airlines Group Inc. rose over 5% in premarket trading Tuesday. In Europe, British Airways' parent International Consolidated Airlines Group SA rose almost 20% in London.

U.S. airline stocks have soared since mid-May on signs that people have cautiously started to book flights again and are reviving leisure travel plans for the summer. Financial support from governments for beleaguered carriers like Germany's Deutsche Lufthansa AG, and easing of travel restrictions in Europe and parts of Asia, have further buoyed sentiment this week.

"Opening up is coming more quickly than anticipated by some investors," said Seema Shah, chief strategist for Principal Global Investors. Still, "the sector looks cheap, but it's cheap for a reason," Ms. Shah cautioned.

German travel operator TUI AG plans to resume overseas flights and holidays by the end of June, Chief Executive Officer Fritz Joussen said in an interview with the Rheinische Post over the weekend. Its shares soared 39% in London on Tuesday, leading gains among European stocks.

Lufthansa rallied 6.8%, extending its two-day gain to almost 15%, after the German government and the carrier said Monday that they had agreed on a EUR9 billion euro ($9.81 billion) bailout deal. If the package is approved, Lufthansa will join other European airlines including Air France KLM and easyJet PLC in receiving financial support from governments.

For months, strict travel restrictions intended to try to contain the spread of novel coronavirus have seen the world's largest airlines ground large parts of their fleets and lay off or furlough swaths of their workforces. Now, signs that borders might be loosened to allow some tourism and business travel, along with financial support from governments, are offering tentative hope for the sector.

Spain on Monday said it plans to lift a two-week quarantine on foreign visitors from July 1, a move that is likely to encourage tourists to visit the country over the summer. That came after Germany said last week that its border controls would be lifted June 15.

"It would be hard to argue that traffic is going to come back and normalize in the next few months, but there are signs that we may be past the worst," said Adrian Yanoshik, an analyst covering U.S. and European airlines at Berenberg Bank. "These companies are pretty distressed, so anything that improves their short-term solvency is going to be read positively."

Daily passenger figures from the Transportation Security Administration have shown an uptick in the number of travelers at U.S. airports from the lows hit in April, marking yet another encouraging sign for investors, analysts said.

Last week, some of the biggest U.S. carriers said that bookings had begun to trickle in, and cancellations have slowed. United Airlines said it would restore some capacity in July, while Southwest said its flights are carrying more people than it had previously anticipated. Despite the uptick, demand is still a fraction of what it typically would be.

"Airlines will survive, they will recover, but it will take some time. They will burn a lot of cash in this crisis," said , an analyst covering industrials and airlines at Commerzbank Research. "For investors, the main focus will be on their financial strength, their rate of cash burn, and what flying looks like when we get back life without lockdown rules."

--Malte Schulz

Write to Anna Isaac at anna.isaac@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
AIR FRANCE-KLM 0.32% 5.084 Real-time Quote.-0.70%
AMERICAN AIRLINES GROUP INC. -4.14% 15.76 Delayed Quote.-0.06%
AT HOME GROUP INC. -2.95% 22.73 Delayed Quote.47.02%
COMMERZBANK AG -1.32% 5.668 Delayed Quote.7.63%
DELTA AIR LINES, INC. -3.59% 39.98 Delayed Quote.-0.57%
DEUTSCHE LUFTHANSA AG 0.05% 10.52 Delayed Quote.-2.73%
EASYJET PLC 0.90% 832 Delayed Quote.0.24%
HOPE, INC. 2.31% 3100 End-of-day quote.-31.03%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A. 0.03% 162.25 Delayed Quote.1.53%
LETS HOLDINGS GROUP CO., LTD. 1.58% 7.72 End-of-day quote.-0.77%
LOOK HOLDINGS INCORPORATED -1.07% 921 End-of-day quote.-3.76%
PRINCIPAL FINANCIAL GROUP, INC. -0.73% 53.31 Delayed Quote.8.24%
SOUTHWEST AIRLINES -4.42% 46.66 Delayed Quote.0.11%
TUI AG 3.87% 4.48 Delayed Quote.-13.61%
UNITED CONTINENTAL HOLDINGS, INC. -5.18% 43.89 Delayed Quote.1.48%
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Financials (USD)
Sales 2020 9 160 M - -
Net income 2020 -3 164 M - -
Net cash 2020 2 324 M - -
P/E ratio 2020 -8,24x
Yield 2020 0,54%
Capitalization 27 542 M 27 542 M -
EV / Sales 2020 2,75x
EV / Sales 2021 1,63x
Nbr of Employees 57 931
Free-Float 67,0%
Chart SOUTHWEST AIRLINES
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Southwest Airlines Technical Analysis Chart | LUV | US8447411088 | MarketScreener
Technical analysis trends SOUTHWEST AIRLINES
Short TermMid-TermLong Term
TrendsNeutralBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 52,68 $
Last Close Price 46,66 $
Spread / Highest target 39,3%
Spread / Average Target 12,9%
Spread / Lowest Target -14,3%
EPS Revisions
Managers and Directors
NameTitle
Gary C. Kelly Chairman & Chief Executive Officer
Thomas M. Nealon President
Michael G. Van de Ven Chief Operating Officer
Tammy Romo CFO, Principal Accounting Officer & Executive VP
Landon Nitschke Senior Vice President-Technical Operations