Challenging Work Conditions Drive Southwest Pilots to Lawsuit

Southwest Airlines stock remains up 31.3% year-over-year

Deputy Editor
Sep 1, 2021 at 10:34 AM
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Southwest Airlines Co (NYSE:LUV) is facing a lawsuit from its own pilots, who argue the working condition changes, including forced time off, made in response to the Covid-19 pandemic, should have been subject to bargaining with the pilots' union. Tensions have mounted between Southwest and its staff, escalating to the point that the pilots union threatened to picket over the winter holidays. In response, Southwest cut its flight schedules last week in response to the employee protests. At last check, LUV was trading flat, up less than 0.1% at $49.79.

Southwest Airlines stock's 40-day moving average has put pressure on the equity since shortly after it nabbed a three-year high of $64.75 on April 14. Rally attempts have been thwarted by the $52 level in recent months, with a floor at the $47 mark. Meanwhile, LUV is coming off its fourth-straight monthly loss, though it remains up 6.7% year-to-date.

Analysts are still overwhelmingly bullish toward the airline name, with 14 of the 15 in coverage rating the security a "buy" or better. Plus, the 12-month consensus price target of $66.40 is a whopping 33.5% premium to current levels.

In the options pits, there's heavy penchant for bullish bets. In fact, the stock's 10-day call/put volume ratio of 3.87 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), stands higher than 71% of readings in its annual range, meaning long calls are being scooped up at a quicker-than-usual clip.   


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