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Southwest's stock slumps as analyst says canceled flights could add to cost pressures, hurt labor relations

Shares of Southwest Airlines Co. (LUV) slumped 2.9% in premarket trading Monday, to pace the declines among its air-carrier peers, after Southwest canceled more than 1,000 flights on Sunday, which the company blamed on air-traffic control issues and disruptive weather. Analyst Savanthi Syth said she expected only a "limited financial impact and no forward demand implications" given the setbacks happened during an off-peak period and weren't limited to Southwest, but she added that because the airline had already made capacity cuts to address operational reliability the recent setback "likely adds to the related unit cost pressure and may exacerbate strained labor union relations." Meanwhile, Syth reiterated the outperform rating she's had on the stock since November. Southwest's stock selloff comes as the U.S. Global Jets ETF (JETS) slipped 0.6% in premarket trading, while futures for the S&P 500 gave up 0.3%. Among other air carriers, American Airlines Group Inc. shares (AAL) eased 0.3%, Delta Air Lines Inc. (DAL) declined 0.5% and United Airlines Holdings Inc. (UAL) shed 0.4%.

-Tomi Kilgore

 

(END) Dow Jones Newswires

10-11-21 0853ET

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