Southwest Airlines said it would limit its capacity growth–giving its shares and those of competitors like DL AA and UA a big boost today.
Airlines have been beaten down in recent weeks as investors became concerned that the industry was forgoing the discipline that had helped make their shares a must own until this year. It wasn’t hard to see why: Southwest Airlines, for one, said it would grow its capacity by as much as 8%, while American Airlines’ CEO Doug Parker said he would cut ticket prices to battle low-cost competitors.
With that as the backdrop, the promise by Southwest CEO Gary Kelly to back off the 8% target came as a breath of fresh air, and helped give the beaten down sector a lift today. Spirit Airlines and Frontier Airlines see the move as a capacity increase opportunity in Texas and Maryland.