The U.S. government is suing Southwest Airlines (LUV) over what it says are “chronically delayed flights.”
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The U.S. Department of Transportation (DOT) has filed a lawsuit against Southwest Airlines over the carrier’s operations, which the government says result in unacceptable delays to its flights. The lawsuit comes after the Department of Transportation fined fellow carriers Frontier Airlines (ULCC) and JetBlue Airways (JBLU) for late arrivals.
The lawsuit and fines come at the end of the administration of U.S. President Joe Biden, which has taken a hardline on consumer protections and poor customer service. The Transportation Department claims that Southwest’s flights from Chicago to Oakland, and from Baltimore to Cleveland, arrived late nearly 200 times between April and August 2022.
Chronic Disruptions
The government further accuses Southwest Airlines’ flights of chronic disruptions and says that, 90% of the time, the delays are the fault of the airline rather than due to inclement weather or other issues. The Transportation Department considers a flight to be “chronically delayed” if it is flown at least 10 times a month and arrives more than 30 minutes late more than half the time.
Southwest Airlines said it “is disappointed that DOT chose to file a lawsuit over two flights that occurred more than two years ago.” News of the government lawsuit comes as Southwest Airlines remains under pressure from activist shareholder Elliott Investment Management, which is agitating for change at the carrier.
The airline last year outlined a plan to increase profits that includes cutting its open seating model in favor of assigned seats, and creating a section with extra legroom, operating overnight flights, and eliminating unprofitable routes. Last September, Southwest slashed its flights from the airline hub of Atlanta, Georgia and announced job cuts.
LUV stock has gained 17% in the past 12 months.
Is LUV Stock a Buy?
The stock of Southwest Airlines has a consensus Hold rating among 15 Wall Street analysts. That rating is based on four Buy, nine Hold, and two Sell recommendations issued in the last three months. The average LUV price target of $33.63 implies 2.53% upside from current levels.
