Southwest Airlines says it will return to normal flight schedule Friday

Yahoo Finance Live anchors Brian Sozzi and Brad Smith discuss the decline in stock for South Airlines amid holiday travel chaos, as well as the airlines’s plans to return to a normal flight schedule on Friday, December 30.

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BRIAN SOZZI: All right, well, one energy dependent sector, of course, the airlines. We're also watching shares of Southwest this morning after the airline faced a brutal few days leading to thousands of canceled flights. But one analyst at CFRA is not expecting this to have a long-term negative impact. Southwest says it's planning to return to its normal flight schedule today.

And just going through this note over there by CFRA, this particular analyst, Colin Scarola And he really slashed his earnings estimates for, I believe, the-- I believe, next year-- or actually, the fourth quarter to 120 from 186. So that was the full year estimate for him. But a major cut, in large part, because of a major hit to fourth quarter profits.

And yesterday, you know, I mentioned, perhaps, Ed Bastian, Delta CEO, and Robin Hayes over at JetBlue should write an op-ed and tell us all why they are a different entity than Southwest. Yet, Scott Kirby kind of do that yesterday last night over on his Instagram page. He said, you know what, guys? We were the best run airline during this whole entire weather debacle. He said, we weren't perfect, but he thinks-- of course, he's not going to say they suck, but still, he thinks they operated very, very well. And just judging on their cancellations versus the complete debacle at Southwest, I would have to agree with Scott.

BRAD SMITH: Yeah, for Southwest, what they had put out late yesterday, I believe it was, continuing to operate 1/3 of its schedule they had yesterday on Thursday, December 29. Planning to return to normal operations, minimal disruptions expected for Friday, today, December 30 there. And they're saying that they're encouraged by the progress that they've made to realign crew.

But there's going to be significant investments that need to be made from this company to better understand and have insights real-time into where the crew is, where they may still be in air or where they're in transit to another location, where they have to connect in order to make another flight happen as well.

BRIAN SOZZI: Oh, I'll add this, too. I'm really not a fan of that CFRA call. I understand where they're coming from-- pull back on the stock on this news. You would think maybe it's some form of buying opportunity. But bottom line this-- you do not the longer term effects of this situation. Of course, it's a major earnings hit in the fourth quarter, but how long does this continue into next year? And that is very hard to estimate. As a former analyst, I wouldn't-- it's hard to model these situations. They truly are the great unknown for companies.

BRAD SMITH: It is. It is difficult. And the other thing here, too, is to remember that consumers, even in times of an economic pullback, they're going to look for deals. And so they don't become as airline agnostic unless they have specific points or rewards or a loyalty program that they've been enrolled in. And instead, they will just go out and look for deals. They'll look for the best prices. So price competition or just buying based on price becomes prioritized that much more.

So perhaps that's where some of this inclination for this note really looks at some of the opportunity for Southwest in that environment where if you did see a significant pullback that really hampered or dampened the ability for somebody to say, you know what? I only fly Delta, or I only fly United, or I only fly American Airlines-- to say that, you know what? I'll fly anybody, just as long as they got a cheap price.

BRIAN SOZZI: Well, all these people that got stuck in airports because they got--

BRAD SMITH: Yeah, it's frustrating.

BRIAN SOZZI: --really taken to the woodshed by the likes of Southwest, come holiday season 2023, they're going to go online. They're going to see maybe an open flight for Southwest. And you know what? I'm not flying this airline. I'm not flying this airline.

BRAD SMITH: Yeah, the same way that I do with one.