Southwest assumed with a Sell at UBS

UBS assumed coverage of Southwest (LUV) with a Sell rating and $27 price target The firm says supply and demand balance is the most important driver of airline RASM growth and margin performance, and expects the downshifting of supply growth from 5%- 6% in the first half of 2024 to 1%-2% growth in the second half to support an improvement in supply and demand which translates to stronger RASM growth and improving margins in 2025, the analyst tells investors in a research note. The firm’s cautious view on Southwest is driven by their current weak margin performance and the execution risk associated with their new service and revenue strategy.