Southwest Airlines is doing significantly worse than its peers

Southwest Airlines Co (NYSE: LUV) is trading meaningfully down on Tuesday after the air carrier said it was unlikely to fly more than a third of its schedule in the next several days.

Other air carriers are holding up better

Winter storms made the world’s largest low-cost carrier cancel 70% of its flights on Monday and 63% on Tuesday. In a statement, Southwest apologised to its passengers and said it was open to reimbursing “some” of them.  

In comparison, peers American, United, and Delta trimmed only 1.0%, 5.0%, and 9.0% of their respective schedules on Monday.

Consequently, the U.S. Department of Transportation has announced an investigation into mass cancellations at Southwest Airlines, especially since it’s warning of continued disruptions while other air carriers are stabilizing now that the weather is improving.  

Southwest stock is now down about 30%

Southwest Airlines will likely offer more insight into the costs related to these disruptions next month when it reports its quarterly results.

So far, consensus is for it to earn 82 cents a share in its fiscal Q4. In the same quarter last year, it had 14 cents of per-share earnings. According to CNBC’s Leslie Joseph:

Versus the start of 2022, Southwest stock is now down roughly 30%. Those interested in buying its shares on the pullback should know that Wall Street currently has an “overweight” rating on LUV.