Originally Posted by
REF 5
If SWA does $4.00-$6.00 a share in 2026, that would make SWA operating margins as high or maybe even higher than UAL and Delta, This happy talk of premium is the only way it will begin to subside. I still reserve judgment on it because its such a turnaround. I also reserve judgment because the macro can always and does take assumption's from a perfect scenario. If SWA does $2.0-$2.5 Billion in earnings without lounges, first class and "food service", your argument starts too lose its muster. Especially on the domestic side of the business where 95% of SWA's revenue is derived from. PRASM for 2025 came in pretty much industry norm stage length adjusted(without all the new initiatives turned on). As I posted previously, RASM guidance is suppose to be up 9.5% for the first quarter(the dead quarter). Comps also play a role in this because both PRASM and RASM have been underperforming for years. So the numbers look big. EM sold 4 million shares recently and still has 46 million in ownership. They seem to think their is more earnings to come. They are much smarter than me. When other airlines revenues are derived from a large portion of its revenues form international(UAL 45%) its make total sense and the yields prove it. Domestically all the big three plus SWA, domestic yields have been lack luster over the last three years. Most of it is capacity driven. SWA definitely had a lot to do with it because they are the largest domestic airline. Lounges are coming, code sharing, earn and burn on the partnerships as well as new chase card. If that is not baked into earnings in 2026 even better. One bit of other info, ATL (air traffic liabilty)was down but that's because passengers are already beginning to use their points for buy ups. Competition is good and keeps this business moving. If you think that SWA will falter, bankrupt in a year or two and furlough, well thats your opinion. Who knows you maybe right. Both Delta and UAL are doing great financially. First financial test will be in about 90 days with their first report card. We'l see how everyone compares.
That assumes you maintain a significant customer base (to support RASM) does it not? That's why I bring up the demographic shifts in the markets. Our analysis shows a shifting to more of the "experience" traveler - at least those with the money to do so. It's a shift from 2 decades of "just get me there at the lowest fare". DAL was the first to see this and UAL is now blueprinting that and having good success with it. You now have not one, but two airlines offering premium experiences for customers at fare rates not that more than what you guys are charging.
You've been able to sustain your RASM as UAL wasn't really out there until recently, now, with their premium offerings. They fly to more places you guys do. You don't think that will pull form you or do you trust your customer base is loyal enough to remain? Your ticket prices are not much cheaper these days (I fly on you all a lot BTW) and quite frankly if given a choice of doing a long segment on you or UAL/DAL I'm going with UAL/DAL. It's just a much better product IMHO.
Also, no where did I state I think SWA would falter or go bankrupt (I wouldn't wish that on anyone). I do agree competition makes us all better and that's why I want to see you guys step up. That was stated in my very first post here.