User avatar
1337Delta764
Topic Author
Posts: 5108
Joined: Mon Oct 31, 2005 4:02 am

Could United Boot Southwest From S&P 500?

Tue Sep 10, 2013 5:12 pm

With the recent news of Delta joining the S&P 500, I was thinking, looking at market caps for various U.S. airlines, presently United Continental Holdings (NYSE: UAL) has a higher market capitalization at $11.46B than Southwest Airlines at $9.7B. It is a bit surprising that United Continental Holdings wasn't added to the index. Perhaps they will be added in the next selection.

So, is there a chance of United possibly booting Southwest from the S&P 500?

[Edited 2013-09-10 10:14:16]
Yes, I wear Fairy Tale Pink IZOD shirts. I am a real man.
 
catiii
Posts: 2564
Joined: Mon Mar 31, 2008 1:18 am

RE: Could United Boot Southwest From S&P 500?

Tue Sep 10, 2013 6:21 pm

There's 5 main criteria S&P uses when looking for Index candidates: trading analysis, liquidity, ownership, fundamental analysis, market capitalization, and sector representation. Since market cap is just one of the criteria, I don't think UA necessarily will boot out anyone based solely on that. In fact, given the sector representation criteria, my sense would be that Southwest would likely stay in because they provide a diverse alternative to DL.
 
User avatar
coronado
Posts: 1162
Joined: Sat Jun 26, 1999 9:42 am

RE: Could United Boot Southwest From S&P 500?

Tue Sep 10, 2013 6:49 pm

I don't think it is a question of booting LUV. LUV is still by far the strongest airline balance sheet wise due to the accumulation of profitable years. They pay a dividend.

I think if United Continental keeps improving, becomes more consistently profitable, perhaps starts recognizing a dividend, they should be able to get a spot on the S&P 500 replacing some other company that may get acquired, taken private and taken off the index.

There is no reason there could not be more than 2 airlines on the S&P 500, heck if more of them become ''investment grade'' even if just merely 'low investment grade' you could see 3 or 4 airlines on the index as long as they become sufficiently and consistently profitable over time for the market to award them a higher market capitalization, while still being a balanced component of the index.

I can envision in the next couple years some mergers among pharmaceutical companies which are a big component of the S&P 500, opening up slots for companies in other industries such as airlines, as long as they are sufficiently, consistentely profitable and able to maintain a high market cap.

I think in the case of United they will probably want to see some more progress on the merger and some sign that the promised synergies are really materializing. Let's face it the lack of unified work contracts throughout the employment base and the need to set up separate satellite bases in towns such as Denver to support sCO staff suggests that there is still work to be done.

One of the criteria by the S&P committee is profitability. UAL most current EPS (earnings per share) is a negative 1.90. whereas Deltas and Southwests EPS are significantly profitable.

[Edited 2013-09-10 12:07:49]
The Original Coronado: First CV jet flights RG CV 990 July 1965; DL CV 880 July 1965; Spantax CV990 Feb 1973
 
sccutler
Posts: 5638
Joined: Thu Jan 27, 2000 12:16 pm

RE: Could United Boot Southwest From S&P 500?

Tue Sep 10, 2013 8:26 pm

(Chuckle).

Remember, shortly after 9/11, when Southwest's market cap was greater than the rest of the US airlines - combined?
...three miles from BRONS, clear for the ILS one five approach...
 
User avatar
EA CO AS
Posts: 14008
Joined: Wed Nov 14, 2001 8:54 am

RE: Could United Boot Southwest From S&P 500?

Tue Sep 10, 2013 10:17 pm

Quoting Coronado (Reply 2):
LUV is still by far the strongest airline balance sheet wise

Is it?

Quoting Coronado (Reply 2):
They pay a dividend.

So does ALK.

Quoting Coronado (Reply 2):
There is no reason there could not be more than 2 airlines on the S&P 500, heck if more of them become ''investment grade''

Ask LUV shareholders who are ticked at the dismal performance of the stock over the past 10 years if they still consider it "investment grade."
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group

Who is online

Users browsing this forum: ogre727, Redd, TheF15Ace and 2 guests

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos