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Southwest (LUV) CEO Sees a Cloud Cast Over Travel Recovery

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Zacks Equity Research
·2 min read
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With coronavirus cases noticing a relapse in the United States, the slight recovery in air-travel demand suffered a setback. As a result, carriers like American Airlines AAL, United Airlines UAL and JetBlue Airways JBLU provided drab fourth-quarter 2020 updates due to the slowdown in air-travel demand.

Recently, Southwest Airlines LUV CEO Garry Kelly echoed similar sentiments and went a step ahead in admitting reportedly that he expects “really rough months” in early 2021. Apart from weakness in air-travel demand, the fact that demand is usually low in January and February actually provoked Kelly’s warning.

Emphasizing this bleak scenario, Kelly said that currently, domestic travel is only at around 33% of the year-ago levels. The situation pertaining to international travel is even worse, trending at around 15% of the 2019 levels due to various restrictions.

On a brighter note, Kelly expects the Dallas-based carrier, currently carrying a Zacks Rank #3 (Hold), to lose less money in the final quarter of 2020 on a sequential basis. Notably, the airline incurred a net loss of $1,157 million in third-quarter 2020. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Another cheerful update was that despite the pandemic stress, the carrier will not hold back its expansion plans. Per Kelly, the carrier will continue to broaden its network by flying to cities beyond the 10 already announced for 2020 and 2021.

Due to coronavirus-induced lackluster air-travel demand, shares of Southwest Airlines have dipped 2% since the beginning of March against the Zacks Transportation sector's growth of 29.7%.

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Southwest Airlines Co. (LUV) : Free Stock Analysis Report
 
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
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American Airlines Group Inc. (AAL) : Free Stock Analysis Report
 
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