Earlier this year, Warren Buffett turned heads when he stated during a CNBC interview that he would consider having Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) buy an entire airline. The conglomerate already owns significant stakes in the four largest U.S. airlines, but an outright acquisition of one would allow it to put more money to work.

This article originally appeared in The Motely Fool.

In the weeks after Buffett mentioned that he would consider acquiring an airline, several analysts opined that Berkshire Hathaway might buy Southwest Airlines (NYSE:LUV). On Wednesday, analysts at Morgan Stanley climbed on the bandwagon. While they don't have any knowledge of merger-and-acquisition discussions between the two companies, they argued that Southwest would be a logical acquisition candidate.

Buffett is on the hunt for big deals

Berkshire Hathaway is flush with cash: It currently has more than $100 billion parked in cash and short-term government debt. Buffett has indicated that he would like to put that money to work through acquisitions. But he has had trouble finding good targets recently.

The problem is price. While Buffett has famously stated, "It is far better to buy a wonderful business at a fair price than a fair business at a wonderful price," the Oracle of Omaha hasn't given up on valuation analysis entirely. A nearly decade-long bull market has left many stocks trading above Buffett's estimates of their fair value.

However, one part of the market that remains attractively priced is the airline sector. Many (though not all) airline stocks have declined in 2018, as rising oil prices and overcapacity in parts of the domestic market have combined to pinch the industry's profitability. This has helped fuel the speculation that Berkshire Hathaway could try to buy a major airline.

The rumors continue

In their recent note, Morgan Stanley analysts Kai Pan and Rajeev Lalwani highlighted several reasons why Berkshire Hathaway might want to buy Southwest Airlines. These included the carrier's strong management team, relatively consistent earnings performance, rock-solid balance sheet, low cost structure, and leadership position in its industry. These are all qualities that have appealed to Buffett in companies he has acquired previously.

The analysts also believe that Southwest Airlines' management could be interested in brokering a deal. First, Berkshire Hathaway has access to a massive amount of low-cost capital, which could allow Southwest to invest more aggressively in upgrading to state-of-the-art planes.

Second, Berkshire Hathaway has a "hold forever" attitude toward the businesses that it acquires. Thus, Southwest Airlines executives would have more freedom to pursue strategies that could take years to pay off, avoiding the pressure to meet quarterly and annual earnings estimates that is typical for public companies.

Southwest Airlines does seem like a good target — at the right price

There's no concrete evidence yet that Berkshire Hathaway is seriously considering buying Southwest Airlines. Buffett is famously patient and could opt to use excess cash to buy back Berkshire Hathaway stock or continue holding it until the next bear market.

That said, analysts are right to highlight Southwest as one of the most compelling acquisition options today. For one thing, its operating margin is starting to stabilize and could begin rising again as soon as the fourth quarter. Analysts currently project that earnings per share will surge 20% year over year in 2019. It also has substantial long-term growth opportunities in markets like Hawaii, Canada, and Latin America.

Furthermore, Southwest Airlines would be a meaningful investment for Berkshire Hathaway. The company currently has a $34 billion market cap. With a typical deal premium, it would cost a minimum of $40 billion, using up a substantial chunk of Berkshire Hathaway's excess cash.

Finally, Southwest Airlines stock is reasonably priced. It currently trades for a little less than $60, or 12 times forward earnings. Berkshire Hathaway could thus offer shareholders a sizable takeover premium without overpaying. There's no guarantee the two companies will ever make a deal, but Southwest Airlines and Berkshire Hathaway certainly look like a match made in heaven.

Adam Levine-Weinberg owns shares of Southwest Airlines. The Motley Fool recommends Berkshire Hathaway (B shares) and Southwest Airlines. The Motley Fool has a disclosure policy.