Key takeaways
- Shares of Southwest Airlines are on the radar Monday after the engine cover came off during takeoff on a flight bound for Houston.
- The latest mishap follows two other safety incidents at Southwest over the past month.
- Southwest lowered its outlook for the current quarter and full year in March, citing reduced capacity due to fewer Boeing deliveries.
- Southwest Airlines stock price may find support around $22.70 from the November 2023 low and resistance near $38 from the July 2023 countertrend peak.
Shares of low-cost airline Southwest Airlines (LUV) may face turbulence on Monday after the Federal Aviation Administration (FAA) reported Sunday afternoon that one of the airline's Boeing 737s lost its engine cover during takeoff, which then hit a wing flap.
The incident occurred on Southwest Flight 3695 at Denver International Airport shortly after 8 a.m. local time, forcing the 737-800 aircraft to return to the gate, and customers were safely transferred to a replacement plane to complete its trip to Houston William P. Hobby Airport.
Southwest has not yet confirmed when the plane, which entered service in 2015, was last serviced, but said it was investigating the incident. “Our maintenance teams are inspecting the aircraft,” the airline said. The FAA also said it is investigating the mishap.
The latest safety concern for the airline comes just days after the airline reported that an engine fire caused one of its planes to abort takeoff and return to the gate in Lubbock, Texas. It also follows an incident in March in which one of the airline's planes veered off course as it approached New York's LaGuardia Airport, causing it to come too close to an air traffic control tower during landing. .
The incident comes at a time of increased scrutiny for Boeing (BA) after a January accident where a door plug exploded on an Alaska Airlines (ALK) 737 Max 9 in mid-flight, prompting the FAA to ban to the aircraft manufacturer to expand its production of 737 Max aircraft. until you are satisfied with your quality checks. Last month, Southwest, which flies an all-narrowbody Boeing 737 fleet, said fewer aircraft deliveries this year had led it in part to lower its outlook for the current quarter and full year due to reduced ability.
Looking at the weekly chart, Southwest Airlines' stock price has remained entrenched in a downtrend since falling below the 200-week moving average in July last year.
Looking ahead, investors should monitor whether the stock can hold above a key trend line dating back to May 2021. A break below this closely watched indicator could see the price retest the low. November 2023, around $22.70, while an upward move may find selling pressure nearby. the peak of the countertrend in July 2023 is around $38. Interestingly, both levels also correspond to pandemic-era areas of support and resistance.
Southwest shares ended last week at $28.34 and are down 19% from their closing high for the year of $34.83 set on March 7.
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As of the date of writing this article, the author does not hold any of the above securities.
