10 Best Stocks to Buy According to Value Investor Oldfield Partners

5. Southwest Airlines Co. (NYSE:LUV)

Oldfield Partners’ Stake Value: $54,218,811

Percentage of Oldfield Partners’ 13F Portfolio: 10.24%

Number of Hedge Fund Holders: 21

Southwest Airlines Co. (NYSE:LUV) is a major global airline facing recent financial challenges, including a significant stock decline and reduced profit margins over the past four years. Despite these pressures, Southwest maintains strong operational performance, achieving a completion factor of 99.5% even amid adverse weather conditions. For instance, after Hurricane Beryl, the airline recovered swiftly from an 8% cancelation rate to only 0.3% the next day.

Revenue for the quarter Q2 2024 saw a 3.8% year-over-year decline, largely due to an oversupply of domestic capacity and challenges with a new revenue management system. To address these issues, Southwest is implementing strategic changes, including moving from an open seating to an assigned seating model based on customer preferences and competitive pressure. This transition aims to enhance revenue and operational efficiency while retaining key elements of the Southwest experience.

Additionally, Southwest Airlines Co. (NYSE:LUV) is adjusting its fleet and capacity strategies, including reducing aircraft deliveries and optimizing schedules to better align supply with demand. The airline’s capital expenditures for 2024 are projected to be around $2.5 billion, lower than earlier expectations, and it is focused on maintaining a strong balance sheet with significant liquidity.

Looking ahead, Southwest Airlines Co. (NYSE:LUV) plans to continue its strategic transformation, improve revenue management, and enhance operational efficiency. The company remains committed to delivering strong financial performance and shareholder returns, with detailed plans to be shared at their Investor Day in September.