Southwest Airlines In Spotlight After US Drops Lawsuit Over Persistently Late Flights

Southwest Airlines (LUV) would likely garner retail attention on Monday after the U.S. Department of Transportation dropped a lawsuit that accused the carrier of operating persistently late flights.

The lawsuit, filed towards the end of the Biden administration, had alleged that two Southwest flights in 2022 were chronically delayed for months and asked for maximum civil penalties.

"The two flights at issue occurred years ago when the industry faced unprecedented challenges from the COVID-19 pandemic and were delayed due to issues outside of Southwest’s control in numerous cases," Southwest reportedly said.

A chronically delayed flight is usually known as one that operates at least 10 times a month, is late by more than 30 minutes over 50% of the time.

The USDOT had also fined Frontier Airlines (ULCC) $650,000 in January for operating multiple chronically delayed flights.

The legal relief comes amid turnaround efforts by the airline after underperforming its peers.

The airline has taken several actions to rein in costs after being targeted by activist investor Elliott Investment Management. This year, it announced mass layoffs for the first time and said it will scrap its free check-in baggage policy.

According to a Reuters report, it has also sought permission from U.S. regulators to fly more international routes amid resilient demand in luxury and corporate travel.

Retail sentiment on Stocktwits was in the ‘bearish’ (35/100) territory on Friday, while retail chatter was ‘low.’

Southwest stock has pared some of the losses from earlier in the year and is down 2.9% year to date. 

Threats of a tariff-induced slowdown have tapered down after the U.S. paused reciprocal tariffs on a host of countries, including China.

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