Another airline delay, another bad headline for Southwest Airlines (NYSE:LUV). On Tuesday, Southwest Airlines was forced to ground thousands of its U.S. flights due to a technology issue. At one point, LUV stock was down 4% as a result, although it closed lower by less than 1% on the day.
Surprisingly, shares are rallying Wednesday, up about 1.3% on the session. That’s as it rebounds in sympathy with other airline stocks.
Southwest and Its Troubles
While LUV stock took it on the chin on Tuesday — at least briefly — other airline stocks continued higher. Delta Air Lines (NYSE:DAL) gained 2.2%, while American Airlines (NASDAQ:AAL) gained about 2.5%, and United Airlines (NASDAQ:UAL) flew quite a bit higher to about 7.5%.
At one point, 47% of Southwest’s flights were delayed on the day. That totaled more than 2,200 flights on Tuesday. Typically if an airline is responsible for the delay, there’s a chance you could receive some type of compensation.
Depending on the length of the delay, you could get a LUV voucher for another future flight. Or if you’re forced to be somewhere overnight, there’s a possibility you can get a hotel voucher. But after Tuesday’s debacle, Southwest Airlines asked those who had canceled flights to request a refund.
This news comes after a rough holiday season for Southwest. In December, Southwest Airlines canceled over 16,700 flights, disrupting 2 million customers and ended up costing the airline more than $1 billion.
Can LUV Stock Keep Pace With Its Peers?
At one point, Southwest Airlines was the stalwart player in the industry. Its stock price held up better than its peers, and its financials were solid. However, a series of poor operations has really weighed on the stock price.
Even at a time when travel remains pretty strong, LUV stock continues to lag.
Over the past year, shares are down about 30%. That’s far worse than the 5% loss in the S&P 500 and lags behind each of the three other large carriers listed above (Delta, United and American).
Of the airline stocks listed above, LUV stock is the only one with a negative year-to-date return. Shares are down 3.5% so far in 2023, lagging behind the S&P 500’s 8.25% return. As for the other airline stocks, American Airlines is up 7% in 2023, while Delta and United are up about 10% and 25%, respectively.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
