In This Article:
Southwest Airlines Company (NYSE:LUV) stock is trading relatively flat after the company reported mixed fourth-quarter results.
The operating revenue for the quarter grew increase of 1.6% year-over-year to $6.931 billion, missing the consensus of $6.96 billion. Operating revenues, excluding special items, hit $7.0 billion, up 3.3% year-over-year.
Adjusted EPS was $0.56, up from $0.38 last year, beating the consensus $0.44.
The company’ quarterly revenue performance was driven by strong demand, revenue management advances, marketing evolution, and network optimization. Close-in bookings exceeded expectations, especially during the holiday period.
The airline’s adjusted operating income rose to $397 million from $182 million a year ago. Operating expenses fell 7.9% YoY to $6.7 billion, mainly due to lower fuel costs. Excluding fuel, special items, and profit-sharing, expenses rose 6.3% year over year.
Also Read: Southwest Airlines Lifts Q4 Guidance, Launches $750 Million Stock Buyback
LUV’s unit revenue increased 6.2% YoY, Revenue passenger miles declined 3.1% Y/Y, Available seat miles were down 4.4% Y/Y, and load factor was 79.2% compared to 78.2% last year.
CASM-X rose 11.1% year-over-year, including a $92 million gain from a sale-leaseback transaction.
Fourth-quarter economic fuel costs averaged $2.42 per gallon, including $0.07 in premium expenses and $0.01 in fuel hedge gains. Fuel efficiency improved 1.9% year-over-year, driven by increased Boeing 737-8 usage.
The company received 3 Boeing 737-8 aircraft in the fourth quarter, totaling 22 in 2024, exceeding guidance of 20. It ended 2024 with 803 aircraft after retiring 34 Boeing 737-700s and two Boeing 737-800s, postponing four retirements to 2025.
Based on recent discussions, the company said it is optimistic that Boeing can exceed 38 aircraft deliveries in 2025 and plans to leverage any additional deliveries to enhance fleet monetization and optimize capital allocation strategies.
Southwest Airlines ended 2024 with $8.7 billion in cash and equivalents, a $1 billion fully available credit line, and $16.3 billion in unencumbered assets, including $13.3 billion in aircraft value.
The company held a $2 billion net cash position with 43% leverage, returned $680 million to shareholders in 2024, and plans a $750 million accelerated share repurchase in Q1 2025.
Southwest Airlines generated an operating cash flow of $462 million for the fiscal 2024, compared to $3.14 billion a year ago.
“As we look forward, 2025 will be a pivotal year as we continue to execute and deliver on our ‘Southwest. Even Better.’ transformational plan, the largest and most comprehensive in our 53-year history. To that end, we recently reached an amended co-brand agreement with Chase that provides enhanced Cardmember benefits associated with our assigned and premium seating initiative and supports the multi-year financial targets we announced at Investor Day," commented Bob Jordan, President and Chief Executive Officer.