Southwest Airlines (LUV -0.1%) has delivered strong growth rates this year with an increase in capacity and average trip length, although not all investors may be pleased, notes Morgan Stanley.
In an interesting breakdown, the investment firm tabulates that the top 5 Southwest Airlines shareholders also hold a cumulative position of $14.4B in American Airlines (AAL -1.4%), Delta Air Lines (DAL -0.8%), and United Continental (UAL -1%) - airliners which might not benefit from Southwest's willingness to brush aside a tight capacity stance.
Those shareholders might end up better off if Southwest stuck to GDP-linked capacity growth rates, reasons UBS.
The U.S. moves were swiftly followed by flight stoppages from most European carriers, including Lufthansa (OTCPK:DLAKF) and Air France (OTC:AFRAF).
Airlines' safety concerns are heightened after last week's downing of the Malaysian Air passenger jet over Ukraine.
Shares of DAL (+1.4%) and UAL (+2.3%) nevertheless ended with solid gains, and AAL finished with a small loss (-0.2%), as the feeling - for now - is that any revenue losses from canceled flights will be easy to make up.
Deutsche Bank calls the airline stocks oversold after concerns on capacity and pricing took a toll on the sector.
The investment firm makes the key point that domestic carriers (ALGT, JBLU, RJET, SAVE, LUV) have been dragged down on global trends which don't impact them directly.
The long-term outlook by DB on big names such as American Airlines Group (AAL), United Continental (UAL), and Delta Air Lines (DAL) is also favorable with benefits from consolidation still due to roll in.
United Airlines (UAL) has announced it will outsource 637 union jobs (mostly ticket/gate agent and baggage handler positions) at 12 U.S. airports. The company is trying to cut costs in every area it can, after reporting a first-quarter loss in April due to declining revenue and increased costs.
"This is a difficult decision, but we need to ensure that our costs are competitive," says United spokeswoman Christen David.
Under the outsourcing plan, United Airlines will shift these jobs from its payroll, and hire other companies to provide the employees.