Southwest Airlines Co (NYSE: LUV) is in focus today after the air carrier temporarily paused all flights due to technical problems.
Southwest flights are still facing delays
At writing, the ground stop has already been removed but data from FlightAware suggests about 36% of the scheduled Southwest flights are still facing delays. In a statement, the airline said:
Early this morning, a vendor-supplied firewall went down and connection to some operational data was unexpectedly lost. Southwest Teams worked quickly to minimise flight disruptions.
Nonetheless, the incident doesn’t bode well for Southwest Airlines that’s been under heavy criticism ever since it had a meltdown over the recent holiday season.
Today’s disruption, however, was not related to the same software that caused thousands of flight cancellations during the year-end holidays (read more). Versus its year-to-date high, Southwest Airlines stock is now down nearly 15%.
Should you sell Southwest Airlines stock today?
Despite the recent underperformance, a Barclays analyst is not entirely convinced that investing in this airline stock is a smart choice.
Last month, Brandon Oglenski downgraded Southwest Airlines stock to “equal weight” even though it pays a dividend yield of 2.26%. His research note said:
We are concerned that Southwest Airlines’ IT infrastructure remains outdated compared to peers, which likely contributed to last year’s winter holiday operations meltdown.
Southwest Airlines is scheduled to report its Q1 earnings on April 27th. Consensus is for it to lose 21 cents a share this quarter versus 32 cents per share a year ago.
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