Southwest Airlines (LUV) Secures New Credit Facility, Is The Stock Still Cheap?

Elliott Investment Management reduced its stake in Southwest Airlines (LUV) by 19.9% in Q2, now holding 24.3 million shares. The hedge fund had previously cut its position by 40.6% in Q1. This follows Elliott-backed board members' departures in February. Southwest is adjusting operations to improve profitability, including introducing assigned seating. Elliott's sales may signal easing activist pressure, but the airline faces rising costs and competitive challenges.

The FAA is investigating after two commercial planes, American Airlines Flight 386 and United Airlines Flight 739, reported blown tires hours apart at Chicago O'Hare International Airport. Both planes landed safely, and passengers were transported to the terminal. American Airlines and United Airlines confirmed the incidents, with no reported injuries. This follows a series of recent tire-related incidents at Chicago airports.

House Energy and Commerce ranking member Frank Pallone sent inquiry letters to eight US airlines (American, Delta, United, Alaska, JetBlue, Southwest, Frontier, Hawaiian) asking by Aug. 25 how AI and consumer data affect individualized fares. The probe cites FTC surveillance pricing findings and follows JetBlue class actions alleging data-harvesting and algorithmic price targeting.

Zacks Investment Ideas highlights Archer Aviation (Zacks Rank #2), citing an Aug. 10 strategic partnership with Boeing. Archer will acquire Wisk Aero, Insitu and SkyGrid from Boeing for a 19.75% stake in ACHR, and Insitu is expected to add $200 million in annual revenue. Zacks also notes FAA phase 3 progress and a United Airlines order up to $1 billion.

The FAA certified Boeing’s 737 MAX 7 on Monday, nearly nine years after Boeing’s initial expected approval. Boeing shares rose up to about 8%. Southwest Airlines, the launch customer, said it will not begin revenue service until 2027, pending seat retrofits. Boeing has 30 to 40 MAX 7/MAX 10 aircraft built, and analysts cited 282 MAX 7 orders.

According to Worldoil, closure of the Strait of Hormuz has caused global jet fuel shortages, with Europe seeking supplies from the U.S. and Asia. Energy Aspects forecast a Europe jet fuel deficit of nearly 600,000 bpd in Q3. Jet fuel prices swung from $215.32/bbl (end March) to just over $130. Ryanair reported higher costs; Southwest said Q2 fuel expenses rose about $900 million YoY; United expects about $6 billion extra fuel expense in 2026.