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Southwest Airlines Co LUV

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Morningstar’s Analysis

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Southwest Turns a Major Corner as Leisure Demand Spikes Across U.S.; Raising FVE to $66

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

No-moat-rated Southwest turned a major corner this quarter and became the first U.S.-based airline to post a GAAP profit of $0.19 per share as increasing vaccinations substantially increased travel demand from March onward. While the firm would have posted a loss of $1 billion without the second round of payroll support, we think these operating results are indicative of a substantially better operating environment for leisure travel. We’re raising our fair value to $66 per share from $63 as we now expect Southwest can generate operating profits in 2021. We're also decreasing our uncertainty rating for the firm to high from very high.

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Company Profile

Business Description

Southwest Airlines is the largest domestic carrier in the United States, as measured by the number of originating passengers boarded. Southwest operates over 700 aircraft in an all-Boeing 737 fleet. Despite expanding into longer routes and business travel, the airline still specializes in short-haul leisure flights, using a point-to-point network. Southwest operates a low-cost carrier business model.

P.O. Box 36611
Dallas, TX, 75235-1611
T +1 214 792-4000
Sector Industrials
Industry Airlines
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Distressed
Employees 56,051