Southwest and Delta have significantly higher profit margins than their competitors, which allows them to put more money into their business and become less risky during an economic downturn.
Since American and United already have comparably low profit margins, it may be difficult to purchase new assets that will generate positive free cash flow when a price war occurs.
Southwest and Delta deliver notably more shareholder value as their capital costs make up smaller percentages of their return on capital employed than American and United.
After United Continental (UAL) announced its plan to boost capacity and attempt to tackle low price competitors, airline stocks tumbled as fear of an ensuing price war worried investors. My goal in