Southwest Airplane Suffers Engine Issue En-route To Florida

According to media reports, Southwest Airlines Co. (NYSE:LUV) encountered a major incident when one of its planes had to make an emergency landing due to engine trouble.

Incident Details

The Flight 3742 travelling from New Orleans to Orlando, FL made an emergency landing at Pensacola International Airport after the pilot detected an issue with one of its two engines. The plane was diverted to Pensacola to avoid any mishap.

Per the reports, there were 99 passengers on the plane and five crew members. Luckily no one was injured. Some people speculated that an engine blew apart mid-air, however, Southwest spokesperson Chris Mainz denied the possibility of an explosion. The company is expected to work with National Transport Safety Board investigators to find out the reason behind this incident.

The airplane, a Boeing (NYSE:BA) 737-700 was taken out of service after the engine issue. The company was looking for alternatives to assist passengers in reaching Florida. According to the President of Boyd International, Michal Boyd, such serious engine issues are rare for major airlines like Southwest. Moreover, he mentioned that Southwest spends a considerable amount on maintenance and has a good safety record.

Technology Outage Issue

A few weeks back Southwest faced an operational issue due to a computer router failure. This resulted in disruption of its worldwide operations for over three days. The company also announced that the incident will likely have an adverse impact on its third quarter performance. It projected Revenue Per Available Seat Mile (RASM) to decline in the range of 3.5% to 4.5% in the quarter compared with the earlier projected range of a decline of 3.0% to 4.0%.

Southwest has also been grappling with labor issues as the airline is facing a tough time negotiating labor contracts. The company’s Senior Vice President of Labor Relations, Randy Babbitt, will be retiring in fall this year. Thus, we expect the company to face a challenging time ahead.

Zacks Rank and Stocks to Consider

Southwest currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the airline industry include ANA Holdings Inc. (OTC:ALNPY) , Copa Holdings SA (NYSE:CPA) and SkyWest Inc. (NASDAQ:SKYW) , each carrying a Zacks Rank # 2 (Buy).