Category Archives: $LUV

US Airlines get whacked on capacity Concerns…

$AAL and $SAVE – along with all other US airlines got whacked when SouthWest was shown no $LUV by investors after it said that unit seat miles (PRASM) would be lower than expected in Q2 – claiming the industry is adding capacity in anticipation of significant demand.

2CentView has been a $AAL and $SAVE bull from 2013 when the stocks were trading at $24 – still think they can go higher as they are cheap on a p/e basis (AAL = 6x 2016 p/e) – but there is a real concern there will be over capacity and Airlines will again go into a downward spiral like they did before…

If you believe Airlines will control supply and costs prudently this time round – BUY, if not Stay away.

FairValues:

$AAL = 70 Yield 1% [weakest balance sheet of the 3]
$SAVE = 85 [ no debt ]
$LUV=45 [  good balance sheet]