Southwest (LUV) Flies into New York LaGuardia

Southwest Airlines begins to fly into New York this weekend as the company searches for business travelers to increase revenue in a field that it has not ventured in the past. Flying into crowded airports where turnaround times are slower and most travel is for business is something the company does not have much practice doing.

Stock Price and Earnings

The stock moved 5% higher today as the overall market jumped on the prospect of a better economic 2nd quarter than the 1st quarter in the US. But shares of Southwest have be beaten down in recent months from close to $9 a share 6 months ago to a little over $6.25 a share recently. Revenue is falling 9% for the current quarter compared to last year and earnings are also falling 50% for the quarter on a year to year comparison.

Price to Earnings

The forwarding looking price to earnings (P/E) ratio for LUV is currently 15.05 and with the earnings decreasing, it makes an assessment difficult. With rising gas prices though and the economy yet to recover makes the short term future for the airlines troubled. Analysts have reduced their expectations for the current quarter from 19 cents to 8 cents over the past three months. For the current year, similar decreases in earnings expectations show analysts disbelief in any turn around in the near term.