Southwest Airlines Co.

Southwest Airlines had a disastrous quarter and failed to meet the revenue expectations of Wall Street while continuing to face a variety of new difficulties. The company’s losses were significantly wider than expected. Given the height of the weather disruption, a combination of their internal procedures and technology could not keep up with the rate of cancellations. The management claims to be committed to minimizing the possibility of another operational disaster in the coming months. Also, consumer refunds and reimbursements continue to be a top priority as they remain laser-focused on their clients and future plans. During the FAA technological outage, Southwest Airlines tested some of the new mitigation measures that had just been implemented using a NOTAM system. Although disappointing, Southwest Airlines anticipates another loss in Q1 of this year due to a drag on revenue from the operational disruption. Despite the difficulties, their 2023 strategy remains to gain strong profitability and a year-over-year margin increase. We give Southwest Airlines an ‘Underperform’ rating with a revised target price.