Is Southwest Airlines (LUV) The Best Airline Stock in Billionaire Paul Singer’s Portfolio?

We just covered the Top 10 Stock Picks of Billionaire Paul Singer. Southwest Airlines Co (NYSE:LUV) ranks #4 (see Top 5 Stock Picks of Billionaire Paul Singer).

Elliott’s Stake: $1,140,099,220

Airlines are reeling amid the Middle East conflict, with higher oil prices and softer demand hitting margins across the sector. But Southwest Airlines Co (NYSE:LUV) is taking clear steps toward recovery, which supports a longer-term buy case. The company has already moved on to pricing power. It increased bag fees by $10, which is expected to add about $1.16 billion in annual revenue (roughly +3.3%). This step would also support EBITDA.

Southwest Airlines Co (NYSE:LUV) is working to take out costs through variable cost reductions and efficiency measures, which is critical when fuel spikes compress margins. Fleet modernization is another support. Ongoing upgrades to more fuel-efficient Boeing 737 MAX aircraft provide incremental fuel savings and help offset part of the oil price impact over time. Despite near-term pressure, the financial base remains solid.

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