Market Overview

JP Morgan: 'Encouraged' By Southwest's Fare Hikes

Share:

Less than a week after a much-hyped sale, Southwest Airlines Co (NYSE: LUV) raised its fares by $5 each way, according to Jamie Baker, an analyst with JP Morgan.

JP Morgan said that the price hike impacts roughly half of Southwest's 100,000 fares, concentrated in fares with fewer than seven days of advance purchase. This will touch business travelers as opposed to leisure travelers, according to the analysts.

The last price hike was in October, when Southwest followed Delta Air Lines, Inc. (NYSE: DAL) with a $2 price increase. While Southwest has sometimes followed other fare hikes, its fare changes have frequently been followed by other carriers, prompting the analysts to speculate that this $5 increase will be matched elsewhere.

"We're confident in full industry matching," the analysts said.

JP Morgan added that the cause of the "near-universal domestic weakness as of late" was "sloppy industry pricing." With Southwest's fare increases, the analysts said they are "encouraged to see at least one airline trying to shore up revenue, even if only a portion of its fare structure."

JP Morgan has a Neutral rating on Southwest, with Overweight ratings on Delta Air Lines and American Airlines Group Inc (NASDAQ: AAL).

Year-to-date, Delta has been the best performing airline in a struggling industry. Southwest has slipped more than 17 percent, while Southwest dipped 18 percent and American Airlines dropped nearly 25 percent.

However, this underperformance follows extremely strong performance in 2014 that saw Delta gain 82 percent, American Airlines increase 115 percent and Southwest rise 125 percent.

Latest Ratings for LUV

DateFirmActionFromTo
Nov 2020Raymond JamesDowngradesStrong BuyOutperform
Nov 2020JefferiesInitiates Coverage OnBuy
Nov 2020Exane BNP ParibasInitiates Coverage OnOutperform

View More Analyst Ratings for LUV
View the Latest Analyst Ratings

 

Related Articles (LUV)

View Comments and Join the Discussion!

Posted-In: Jamie Baker JP Morgan SouthwestAnalyst Color Analyst Ratings

Latest Ratings

StockFirmActionPT
KALUBenchmarkUpgrades
YEXTDA DavidsonMaintains20.5
BYDB of A SecuritiesMaintains47.0
SAICMorgan StanleyMaintains98.0
PVHMorgan StanleyMaintains104.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com