Trade Airline Stocks On Southwest's Earnings (LUV, AAI, DAL, JBLU, BA, AMR)

Southwest Airlines (NYSE: LUV) reported better than expected earnings this morning.

The Dallas-based airline company reported preliminary findings of 18-cent EPS on revenues of $3.11 billion. These numbers outperform the 15-cent EPS on $3.08 billion revenue estimate, as predicted by Thomson Reuters. Southwest returned over 11% to stock investors in 2010, despite a large amount of volatility during the year.

Southwest Airlines' CEO Gary Kelly spoke on CNBC this morning about the company's sustainability in the industry. Fuel costs are projected to be an issue in 2011, Kelly said. In all, he said the company's great value, lack of additional fees, and exemplary customer service are reasons consumers come back, as well as reasons the airline picks up new customers.

"Overall, we are doing a great job servicing customers," Kelly said. "This is what it's all about."

Southwest Airlines is also making news for its proposed merger with AirTran Holdings (NYSE: AAI). Southwest made the announcement on September 27, 2010, stating its intentions to purchase the low-fare company as soon as a green light is given. The merger is expected to occur in 2011's second quarter.

Southwest Airlines might be a good bet for a longer-term investment, although the airline industry is not in any way a stable industry. News regarding the company's proposed merger is likely to have sway on future stock prices.

Those interested in competitor stocks can take a look at Delta Air Lines (NYSE: DAL). Delta Airlines reported its fourth quarter earnings Tuesday,
as Benzinga reported. Delta reported an EPS excluding items of $0.19, below forecasts ranging from $0.24 to $0.26. JetBlue Airways (NASDAQ: JBLU), Boeing (NYSE: BA), and AMR (NYSE: AMR) are other airline stocks in the same sector as Southwest Airlines.

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