In 2006, the major airline carriers, with the principal exception of Southwest Airlines (LUV), continued to be in dire financial condition following the attack on the World Trade Center in 2001.

The airline industry was obviously in a very unique position at the end of 2006. Are there any special concerns that you have regarding the estimation of the cost of equity for Southwest Airlines using the procedure described here?

Company name American Airlines Delta Airlines Jet Blue Southwest Airlines Levered Equity Beta 3.24 4.05 -0.11 -0.01 D/E ratio Debt Beta 205.16% 0.30 5,663.67% 0.40 106.22% 0.30 14.93% 0.20