UPDATE: Dahlman Rose Upgrades Southwest Airlines To Buy

Dahlman Rose is upgrading the common shares of Southwest LUV to a Buy from a Hold. It believes the integration of AirTran Airways into Southwest will add significant revenue potential related to the Atlanta market. Management's expectations for $400 million in net synergies may prove conservative. Dahlman believes Southwest will outperform its peers with the completion of the AirTran acquisition. Given management's track record we believe integration of AirTran will go quickly and smoothly. Management indicated it expects to see ~$400 million in net synergies by 2013. Dahlman believes this may prove conservative when the two companies begin to operate on a single operating certificate. During 1Q11 Southwest recorded $59 million related to the Wright Amendment, up from the previous year's level of $47 million. Dahlman believes that when the Wright amendment expires in 2014, Southwest will aggressively market flights out of Dallas Love Field. Dahlman forecasts revenues will reach $500 million. Dahlman Rose has a Buy rating and $15 PT on LUV LUV closed Friday at $12.11