Wall Street is beginning to step to the sidelines for Southwest Airlines . The company's second-quarter earnings report disappointed investors. The company said that its ongoing struggles with lower unit revenue on higher costs are likely to continue into the current quarter. Deutsche Bank downgraded shares to hold from buy on an earnings forecast cut and limited upside.
Analyst Savanthi Syth said that while the company has taken the right steps to adjust its schedule to reflect post-pandemic shifts in travel, the recovery to 2019-level profitability will not be seen until 2024 to 2025. "To be clear, we do not believe the Southwest model is broken, and we believe valuation should reflect its net cash position resulting in a balance sheet that is head and shoulders above most of the industry," Syth said in a Friday note.