A Big Upgrade for Southwest Airlines

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In addition to following professional banks, anyone can use Motley Fool CAPS to monitor the collective opinions of more than 125,000 members, many of whom demonstrate better investing insight than published analysts do.

More top-performing CAPS members are feeling the love for Southwest Airlines (NYSE: LUV) lately and have upgraded the airline from its long held two-star ranking to a more formidable three stars. A total of 1,145 members have rated Southwest Airlines, with many of them offering analysis and commentary explaining the recent optimism.

Amid a slow 2008, Southwest has growth in mind for 2009. The low-cost operator looks to increase efficiency by adding more major airports and dropping slower ones, the way its recent pickings from bankrupt ATA Airlines landed it a spot at La Guardia airport. The recent drop in oil and fuel costs has also given Southwest, Continental (NYSE: CAL), US Airways (NYSE: LCC), and others some much-needed cost relief.

While most airlines like UAL's (Nasdaq: UAUA) United, Delta (NYSE: DAL), and American Airlines (NYSE: AMR) have been cutting their workforce, Southwest has been expanding its employee numbers, by 5.3% in October over last year. And it has been dropping fares, like JetBlue (Nasdaq: JBLU) and Virgin America, to shore up more demand after a drop in passengers in November.

With Southwest's lean cost structure, many see the carrier as well-positioned to take advantage of the poor economy and slowing market. The third quarter marked Southwest's 70th consecutive quarter of operating profits, excluding special charges of its fuel hedge portfolio, and it generated record quarterly revenues of $2.9 billion, up 11.7% from last year.

To see what the very best CAPS members are saying now about Southwest Airlines -- as well as other winning stocks they are picking -- head on over to CAPS and have a look.

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On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

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Fool contributor Dave Mock thinks he'll be seeing even fewer of those first-class upgrades coming his way. He owns no shares of companies mentioned here. The Fool's disclosure policy can fly a plane and chew gum at the same time.

Comments from our Foolish Readers

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  • Report this Comment On December 22, 2008, at 6:09 PM, UltimateAnalyst wrote:

    Yes, I think Southwest definetly has an opportunity to thrive in this economic situation. People still need to fly, even if they are flying less, and Southwest is always there to provide cheap flights. Hopefully it will do better with hedging fuel prices in the future.

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Southwest Airlines Co.

CAPS Rating 3/5 Stars

$6.80

+0.21 (+3.19%)

Outperform1103

Underperform229

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