Originally Posted by
Stitches
Swa tends to do better in downturns relative to the legacies because the high prices business travel & expensive first class tickets suffer the biggest cuts. Folks still go to see Grandma for the holidays.
I haven't read the press releases for Delta/United outlook but are they really cutting capacity or are they cutting growth capacity? The devil is in the details.
The problem with that is SWA has legacy cost's. Margins are already super thin. If you lower fares(yields go down), margins go negative. This isn't the SWA of 2008 anymore. This place is a high cost carrier. SWA is not the low lost carrier it once was. SWA still has a cost advantage but its the smallest it's ever been compared to the network carriers. To be fair, all the legacies have high fixed cost's also. Those carriers have more levers to pull to stimulate demand then SWA. Delta is cutting growth of 3-4 percent to flat for the second half of the year. United reports tommorrow.