01—Abstract
Summary
Summary of the 10-Q filed April 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Southwest Airlines Co. reported a first quarter 2024 net loss of $231 milliona, or $0.39 per diluted share, compared with a net loss of $159 million, or $0.27 per share, in the first quarter of 2023.
Operating revenues reached $6.3 billionb, a first quarter record, up $623 million or 10.9 percent year-over-year, driven by an 11.0 percent increase in capacity and a 2.9 percent higher average fare. Operating expenses rose $732 million, or 12.2 percent, led by higher salaries, wages, and benefits ($462 million increase, or 18.6 percent) and maintenance materials and repairs ($121 million increase, or 50.4 percent). Cash flow from operations was negative $104 million, compared with $706 million provided in the prior-year period, largely reflecting a $1.35 billion pilot ratification bonus payment.
Cash and short-term investments totaled $10.5 billionc at March 31, 2024. The company updated its 2024 outlook, now expecting full-year operating revenue growth approaching high-single digits, down from its prior expectation of double-digit growth, because of Boeing aircraft delivery delays. Second quarter 2024 RASM is expected to decline 1.5 to 3.5 percent year-over-year on capacity growth of 8 to 9 percent, and full-year 2024 CASM-X is expected to rise 7 to 8 percent.
The company also disclosed network optimization actions, including ceasing operations at four airports on August 4, 2024, and labor contract extensions with its pilots, flight attendants, and ramp agents. The filing also details ongoing legal matters, including a USERRA class action with a trial date set for July 21, 2025, a securities class action with a pending motion to dismiss, and shareholder derivative suits, along with the December 2022 operational disruption's continuing investigations. Management does not expect these proceedings to have a material adverse effect, though it notes an adverse outcome could be material.
02—Key points
Key Highlights
- Net loss of $231 million ($0.39 per diluted share) in Q1 2024, versus a net loss of $159 million ($0.27 per share) in Q1 2023; non-GAAP net loss excluding special items was $218 million ($0.36 per share).
- Record first quarter operating revenues of $6.3 billion, up 10.9 percent year-over-year, on capacity growth of 11.0 percent and a 2.9 percent higher average fare.
- Operating expenses rose 12.2 percent to $6.7 billion, driven mainly by salaries, wages, and benefits (up $462 million, or 18.6 percent) and maintenance materials and repairs (up 50.4 percent).
- Net cash used in operating activities was $104 million, compared with $706 million provided in Q1 2023, reflecting a roughly $1.35 billion pilot ratification bonus payment.
- Full-year 2024 revenue growth now expected to approach high-single digits, down from prior expectation of double-digit growth, due to Boeing delivery delays; full-year 2024 CASM-X expected to rise 7 to 8 percent.
- Network optimization includes ceasing operations at Bellingham, Cozumel, Houston Bush Intercontinental, and Syracuse Hancock airports on August 4, 2024, and capacity reductions in Atlanta and Chicago O'Hare.
- Cash and short-term investments of $10.5 billion at March 31, 2024; the company suspended share repurchases and paid $215 million in dividends during the quarter.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 26, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $6.33B$5.71B | +10.9% |
| Operating Income | -$393.00M-$284.00M | −38.4% |
| Net Income | -$231.00M-$159.00M | −45.3% |
| EPS (Basic) | $-0.39$-0.27 | −44.4% |
| EPS (Diluted) | $-0.39$-0.27 | −44.4% |
| Shares Outstanding (Basic) | 597.00M594.00M | +0.5% |
| Shares Outstanding (Diluted) | 597.00M594.00M | +0.5% |
05—Questions
Frequently Asked Questions
Why did Southwest report a larger net loss in the first quarter of 2024?
The filing attributes the net loss increase primarily to higher salaries, wages, and benefits expense and maintenance materials and repairs expense, partially offset by the prior-year financial impact of Winter Storm Elliott and the December 2022 operational disruption. Salaries, wages, and benefits rose $462 million, or 18.6 percent, including step and pay rate increases and the recently ratified pilot contract.
How has Boeing's delivery delay affected the company's outlook?
Boeing delivery delays reduced second-half 2024 capacity and led the company to lower its full-year revenue growth expectation from double digits to approaching high-single digits. The company now plans for approximately 20 Boeing 737-8 deliveries in 2024 and expects to end 2024 with roughly 802 aircraft, reflecting 35 retirements.
What is the company's expected cost trend for 2024?
The company expects second quarter 2024 CASM-X to increase 6.5 to 7.5 percent year-over-year and full-year 2024 CASM-X to increase 7 to 8 percent, citing inflationary cost pressures. Economic fuel costs are estimated at $2.70 to $2.80 per gallon for both second quarter and full year 2024.
What legal risks does Southwest disclose?
The filing discloses a USERRA class action over short-term military leave with a trial date of July 21, 2025, a securities class action with a motion to dismiss pending, shareholder derivative suits under Special Litigation Committee review, and possible fines or penalties from government inquiries related to the December 2022 disruption. Management does not expect these to have a material adverse effect, but notes an adverse outcome could be material.
06—Continue