Southwest Airlines (LUV) faces pressure from a looming pilots’ lawsuit accusing the budget carrier of intimidating and disciplining pilots for joining labor unions. According to a ruling passed in an appeals court on October 28, Southwest is said to be illegally intimidating pilots who join a 9,000-member pilots union. The decision ruled in favor of the Southwest Airlines Pilots Association with a 3-0 win.
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Further Details of the Ruling
The win means that pilots are allowed to further pursue the case in a federal court. Earlier, a lower court had dismissed the pilots’ allegations, ruling that it was a minor dispute and thus belonged in arbitration. The main cause for the pilots filing the lawsuit was the firing of “check pilot” Timothy Roebling by Southwest, accusing him of vulgarity. However, the union stated that he was removed because of his decision to join the union’s check pilot committee.
Overall, the Chief judge agreed with the lower court’s ruling that it was a minor case. However, the matter related to Timothy Roebling and threatening pilots who plan to join the union gave the case a different angle. The judge ruled that the allegations “sufficiently support the union’s claim that Southwest intended to ‘weaken’ or ‘destroy’ the operational capacity of the union.” In response, Southwest refuted the ruling and denied the union’s allegations. The air carrier is considering other options.
Analysts’ Views on LUV Stock
Despite Southwest Airlines’ Q3 FY24 beat and amicable deal with activist Elliott Investment Management, analysts prefer to remain on the sidelines on the stock. Yesterday, two analysts reiterated their Hold ratings while one analyst maintained a Buy rating on LUV stock.
For instance, Citi analyst Stephen Trent kept a Hold rating and $31.50 price target (4% upside potential) on LUV stock. The five-star analyst made adjustments to his financial model following the Q3 print. Trent noted that adjustments accounted for higher potential RASM (revenue per available seat mile), lower expected fuel prices, and Q3 results.
Is it a Good Time to Buy LUV Stock?
On TipRanks, LUV stock has a Hold consensus rating based on two Buys versus eight Hold ratings. The average Southwest Airlines price target of $29.94 implies 1.2% downside potential from current levels. Year-to-date, LUV stock has gained 6.8%.
