Southwest Airlines Co. (NYSE:LUV) commented on activist investor Elliott Investment Management picking up a nearly $2 billion stake in the airline. The company stated that it was open to having a dialogue with its shareholders and would value “their perspectives related to enhancing shareholder value.”
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Southwest added that it aims to restore its financial performance through the execution of its Tactical Action Plan announced last year. LUV is also working to optimize its network to match its capacity with demand, resulting in 99% of its scheduled flights operating in the first quarter of FY24.
Southwest’s Dismal Q1 Performance
Southwest has been underperforming peers like Delta Air Lines (NYSE:DAL), despite solid travel demand that is defying macro challenges. Increased labor costs related to new contracts and delays in deliveries of new aircraft are weighing on Southwest’s results.
In Q1 2024, Southwest’s adjusted loss per share widened to $0.36 from $0.27 in the prior year quarter. The company’s operating revenue grew 11% to $6.3 billion but lagged analysts’ consensus estimate of $6.4 billion.
Is Southwest Stock a Buy or Sell?
Analysts remain sidelined about LUV stock, with a Hold consensus rating based on three Buys, 10 Holds, and one Sell. Year-to-date, LUV has ticked higher by more than 3%, and the average LUV price target of $28.68 implies a downside potential of 3.4% from current levels.
