Southwest Airlines Co. (NYSE:LUV) was among the stocks Jim Cramer shared his opinions on during Mad Money. Cramer discussed the stock while discussing low-cost carriers, as he remarked:
In recent years, we’ve seen a wholesale removal of low-end flights. The ultra-low-cost carriers have either gone under, like Spirit Airlines, or cut a ton of capacity, like JetBlue. Southwest Airlines, meanwhile, another low-cost carrier, has become more disciplined, operating much more efficiently ever since activist Elliott Investment Management got involved two years ago.
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Southwest Airlines Co. (NYSE:LUV) provides passenger air travel with a focus on convenience, loyalty rewards, and digital booking tools. Cramer called it a “terrific turnaround story” during the April 14 episode, as he commented:
Fourth discounted company is Southwest Air. Yes, this value-oriented carrier has been making big changes under the watchful eye of the activists at Elliott Investment Management since the summer of 2024. Stock’s done very well over this period before peaking in mid-February as investors realize that a war might be coming. But Southwest has now fallen about 25% in less than two months and trading at less than 15 times this year’s earnings estimates, even though the company’s earnings are expected to be more than triple this year. The risk here is that Southwest won’t be able to make the numbers thanks to much higher oil prices. Then again, the earnings estimates have already come down big from over $4 per share when the war started to just $2.86 per share as of today. And that’s still more than three times what they earned last year.
Long story short, I think Southwest’s a terrific turnaround story, and you’re now getting a chance to buy it at bargain basement prices that I didn’t think it should trade down to. And who knows, you know, I was thinking all day about this, did you hear this thing about United might want to merge with American Airlines? Okay, that seems very unlikely to me. Even if the Trump administration doesn’t block it, states will sue. No judge will rule in that deal’s favor. However, if the big airlines are eager to consolidate, I think they might want to own a small mid-sized airline. I think they might want to own Southwest.
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