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Non-Tech : Southwest Airlines (LUV))
LUV 32.46+3.0%Nov 7 9:30 AM EST
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To: Bryan Arnold who wrote (115)1/16/1997 11:54:00 AM
From: Sam Citron   of 299
 
Thread,

I have just liquidated my long position in LUV at a price of 22. My reasons for doing so are:

(1) It has a substantially higher PE than most other airlines.
(2) Other airlines are announcing favorable earnings comparisons while LUV is announcing unfavorable comps.
(3) LUV has announced that a major reason for the disappointment is higher fuel costs (which is within any airlines power to control through hedging).
(4) Other airlines are better positioned to benefit from a good economic outlook because they have greater financial leverage, less price-elastic customers, and fare systems which are better able to price discriminate.
(5) I am not impressed by LUV's lack of an e-mail feedback loop in their webpage. The company should actively solicit suggestions and comments from customers, shareholders and others. The fact that the company does not do so suggests to me that the company does not value such feedback as highly as I had hoped it might. Without such openness, the company is not as receptive to new ideas as I had hoped.
I prefer companies that can be reached by e-mail and are responsive to same.
(6) Other values in the stock market are more compelling.

That said, I still think LUV is by far the smartest and best managed airline in this country. However, I believe it will continue to underperform the airline industry as long as the economy remains robust.

Regards,
SC
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