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Southwest works to restore historical returns, approaches any product changes with caution

Premium Analysis

As the US aviation industry continues to evolve, or return to more familiar trends, Southwest Airlines remains somewhat of a paradox.

The Dallas-based airline maintains its stature as the only US airline with an investment grade rating by all three ratings agencies. Yet, Southwest remains somewhat sandwiched in between the large three global network airlines in the US - American Airlines, Delta Air Lines and United Airlines - and the ultra-low cost operators.

There seems to be some concern in the investment community that Southwest could lag some its larger peers, as those operators continue to post strong results from their premium offerings.

Southwest acknowledges that there may not be as much demand for lower-end, bare-bones products, and the airline is working to improve its unit revenues relative to the industry.

But the company believes that premium revenue has been highly cyclical - perhaps signalling that no major strategy shift is in development.

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