Why has Southwest Airlines stock jumped? – The Motley Fool


What happened

Southwest Airlines (NYSE: LUV) stock is – what else? – Take off today on a pair of news, one confirmed and the other less.

What is confirmed, it is that yesterday, after the closing of the markets, it was announced that the Federal Aviation Administration had officially authorized the Southwest to begin carrying passengers between the West Coast and Hawaii . Of course, we knew that Southwest was already looking for this permission and would probably get it – but now, it's official.

And unconfirmed: Bloomberg apparently reports that Warren Buffett Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) plans to acquire Southwest in its entirety.

Compass pointing to the north.

The takeover interest rumors have southwestern shares pointing to the north today. Source of the image: Getty Images.

So what

If you ask me, although the news in Hawaii is the most important for Southwest business, it is the rumor of Buffett that is more likely to move the stock. Bloomberg noted that @StockTradersNET had tweeted this last rumor earlier in the day, offering a $ 75 buy price that Buffett could pay to acquire Southwest. This price, nearly $ 20 more than the price today from the southwest, was to attract attention.

For the record, Southwest's answer is:

There have been rumors that Warren Buffett may be looking to buy an airline for some time and that Southwest may be suitable. In general, we do not comment on speculation, but appreciate Berkshire's continued support for Southwest Airlines.

Now what

As nenegative denials disappear, it seems very propitious to me. Southwest does not say that the rumor is true, exactly, but it seems to be very happy not to say that the rumor is UNtrue either.

One could even call the company's answer … encouraging.

Rich Smith has no position in any of the actions mentioned. The Motley Fool owns shares and recommends Berkshire Hathaway (B shares) and Southwest Airlines. Motley Fool has a disclosure policy.

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