LUV – Market expectations are for Uniform ROA to rebound, but management may be concerned about travel demand, flight initiatives, and the MAX aircraft

• Southwest Airlines Co. (LUV:USA) currently trades at a premium relative to UAFRS-based (Uniform) assets, with a 1.4x Uniform P/B. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about pent-up travel demand, flight planning initiatives, and the MAX aircraft’s performance
  
• Specifically, management may lack confidence in their ability to sustain fuel efficiency gains, capitalize on pent-up leisure travel demand, and further execute their flight planning and fleet modernization initiatives. Additionally, they may have concerns about the implementation of the Sabre GDS platform and its impact on customer relationships. Management may also lack confidence in their ability to open more destination stations, fill Boeing MAX seats to full capacity, and execute an all-new maintenance recordkeeping system for their Boeing 737-700s. Furthermore, they may have concerns about the sustainability of MAX’s performance and inconsistencies in MAX’s electrical systems