Southwest Airlines likely to generate a small profit in Q4 —Raymond James

Raymond James analyst Savanthi Syth said in a note to clients Thursday that, unsurprisingly, the recent weather impact on flights and Southwest Airlines (NYSE: LUV) operations means the carrier will feel the greatest impact on its earnings compared to others.

"For airlines in general, bad weather in a single region (let alone a rolling impact across multiple regions) during this peak holiday period is tough due to full planes and greater risk of flight crews "timing out" towards the end of the month," the analyst explained. "Moreover, most of the revenue and profits in 4Q are generated in the 2H of November and December."

However, Syth said Southwest is still likely to generate a small profit in 4Q22.

"Southwest's exposure to airports that struggled the most with severe weather combined with its 'daisy chain' point-to-point network and less sophisticated crew scheduling system appears to have led to the meltdown," the analyst added.

Furthermore, the analyst believes the next most impacted is Alaska Air Group (NYSE: ALK), while American Airlines (NASDAQ: AAL) and JetBlue Airways (NASDAQ: JBLU) are likely the least impacted among airlines under Raymond James coverage.

By Sam Boughedda

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