Earlier today, airline stock Southwest Airlines (NYSE:LUV) revealed its earnings, which sent shares plummeting over 7.5% in Thursday afternoon’s trading. But Southwest wasn’t taking this lying down and revealed a plan to get its earnings back into focus. Based on share prices in Thursday’s trading, though, it wasn’t looking good for the airline.
Southwest’s plan to turn around earnings is going to start pretty drastically. It’s reconsidering the entire cabin layout concept. One of its key differentiating features was its “open seating” plan, which basically let people sit wherever they pleased on a Southwest flight. No first class, no business class, no terrifying coach…but also no massive premium price tags connected to seats that were comfortable and pleasant.
The only real fee that Southwest charged in connection to seating was an advance boarding option that let passengers get a particularly preferred seat. Now, Southwest is reconsidering, and looking into a classed-seating system like most other airlines.
Southwest Will Cut 2,000 Jobs
That’s rough enough, but Southwest also has more of the standard plays for cost-cutting and revenue-hiking on hand, starting with, of course, layoffs. Four Southwest airports will lose service in the months ahead, including Cozumel International Airport, Bellingham International Airport, Syracuse Hancock International Airport, and George Bush Intercontinental Airport. Further, Southwest will cut 2,000 jobs from its roster and limit voluntary time-off programs to try and breathe life into the earnings reports once more.
Is Southwest a Good Stock to Invest In?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on LUV stock based on five Buys and nine Holds assigned in the past three months, as indicated by the graphic below. After a 10.38% loss in its share price over the past year, the average LUV price target of $32.50 per share implies 19.49% upside potential.
