Common Cents purchased LUV today at $37.5 after an approximate 6% intra-day decline. The decline was likely based on news of probable increases in oil prices and capacity increases by airliners, particularly Southwest. Capacity increases, analysts justify, will increase supply at a constant demand, and, consequently, ticket prices (i.e. PRASM) will decline. Southwest's management seems to think that demand AND supply are increasing, so the capacity increase is justified.
Common Cents Take: Great airline for customers. Great company for employees. Great execution by management. None of these change with speculation on the direction of oil prices and PRASM.
Going forward, I will look to unload this chunk above $41, a 9%+ increase.
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