01—Abstract
Summary
Summary of the 10-Q filed April 25, 2025. Cited figures are marked; the original filing is the authoritative source.
Southwest Airlines Co. reported a first-quarter 2025 net loss of $149 milliona, or $0.26 per diluted share, compared with a net loss of $231 million, or $0.39 per share, in the prior-year quarter.
Operating loss narrowed to $223 millionb from $393 million. Total operating revenues rose to a first-quarter record of $6.43 billion, up 1.6 percent, driven by a 9.9 percent increase in passenger yield, while load factor fell 4.4 points to 73.9 percent and available seat miles declined 1.9 percent. Total operating expenses fell 1.1 percent to $6.65 billion, mainly because fuel and oil expense dropped $282 million (18.4 percent), partly offset by higher salaries, wages, and benefits.
On a non-GAAP basis, excluding special items such as $62 millionc of workforce-reduction severance and related costs, the operating loss was $128 million versus $377 million a year earlier. Cash flow improved, with net cash provided by operating activities of $860 million compared with $104 million used in the prior year period. Cash and cash equivalents rose to $8.13 billion, and unrestricted cash and short-term investments totaled $8.3 billion at March 31, 2025.
Total stockholders' equity declined to $9.37 billiond from $10.35 billion at year-end 2024, largely reflecting $750 million of share repurchases and $103 million of dividends declared. The company reported a working capital deficit of approximately $3.2 billion, which it describes as common in the airline industry due to air traffic liability. Current maturities of long-term debt rose to $2.61 billion, including the $1.6 billion 1.25% Convertible Notes maturing in May 2025 and the first Payroll Support Program loan, which was prepaid in full on April 17, 2025 for $976 million.
Looking ahead, the company provided second-quarter 2025 guidance for RASM of flat to down 4 percent and capacity up 1 to 2 percent year over year, with CASM-X expected to rise 3.5 to 5.5 percent. It reaffirmed targets of approximately $1.8 billion of 2025 and $4.3 billion of 2026 EBIT contribution from its transformational initiatives, while withdrawing its full-year 2025 and 2026 EBIT guidance.
The company also plans to reduce third- and fourth-quarter 2025 capacity and to launch a $1.5 billion accelerated share repurchase in the second quarter, expected to complete by the end of July 2025. Bag fees, a new Basic fare, and flight credit expirations take effect for tickets purchased on or after May 28, 2025.
02—Key points
Key Highlights
- Net loss narrowed to $149 million ($0.26 per diluted share) from $231 million ($0.39 per share) a year earlier; non-GAAP net loss excluding special items was $77 million versus $218 million.
- Record first-quarter operating revenues of $6.43 billion, up 1.6 percent, with passenger yield up 9.9 percent and load factor down 4.4 points to 73.9 percent.
- Operating expenses decreased 1.1 percent to $6.65 billion, led by a $282 million (18.4 percent) decline in fuel and oil expense, partly offset by higher salaries, wages, and benefits.
- Operating cash flow of $860 million compared with $104 million used a year earlier; cash and cash equivalents reached $8.13 billion.
- Stockholders' equity fell to $9.37 billion from $10.35 billion, reflecting $750 million of accelerated share repurchases and $103 million of declared dividends; $1.5 billion remains under the $2.5 billion authorization.
- Workforce reduction of approximately 1,750 corporate roles resulted in a $62 million one-time expense, with estimated savings of about $210 million in 2025 and $300 million in 2026.
- Fuel hedging program discontinued; the company held fuel derivatives with a fair value of $92 million as of March 31, 2025, and expects 2025 hedged volumes of 47 percent of estimated consumption.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed April 25, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $6.43B$6.33B | +1.6% |
| Operating Income | -$223.00M-$393.00M | +43.3% |
| Net Income | -$149.00M-$231.00M | +35.5% |
| EPS (Basic) | $-0.26$-0.39 | +33.3% |
| EPS (Diluted) | $-0.26$-0.39 | +33.3% |
| Shares Outstanding (Basic) | 584.00M597.00M | −2.2% |
| Shares Outstanding (Diluted) | 584.00M597.00M | −2.2% |
05—Questions
Frequently Asked Questions
Why did Southwest's net loss narrow in the first quarter of 2025?
Net loss narrowed to $149 million from $231 million, primarily because operating revenues rose $99 million to $6.43 billion while operating expenses fell $71 million to $6.65 billion. The largest expense decline was in fuel and oil, which fell $282 million, mostly due to lower jet fuel prices. Higher salaries, wages, and benefits partly offset these gains.
How much cash and liquidity does Southwest have, and what debt is coming due?
Unrestricted cash and short-term investments totaled $8.3 billion as of March 31, 2025, and the company has $1.0 billion available under its revolving credit facility, which expires in August 2028. Current maturities of long-term debt were $2.61 billion, including $1.6 billion of 1.25% Convertible Notes maturing in May 2025. The company also prepaid the first $976 million Payroll Support Program loan on April 17, 2025.
What is management's outlook for the second quarter and full year 2025?
For second quarter 2025, the company expects RASM of flat to down 4 percent and ASMs up 1 to 2 percent year over year, with CASM-X up 3.5 to 5.5 percent and economic fuel cost of $2.20 to $2.30 per gallon. Management withdrew its full-year 2025 and 2026 EBIT guidance due to macroeconomic uncertainty but reaffirmed targets of $1.8 billion in 2025 and $4.3 billion in 2026 incremental EBIT from its initiatives. Full-year 2025 capacity is now expected to be up roughly 1 percent.
What new policy changes are taking effect that could affect revenue?
For tickets booked and ticketed or changed on or after May 28, 2025, Southwest will introduce bag fees for most fare products, a new Basic fare, and revised loyalty point earning. Flight credits from Basic fare purchases will expire six months from ticketing, and other flight credits will expire one year from ticketing. The company has not yet seen evidence of book-away following the announcement.
What share repurchase activity has Southwest completed or planned?
In first quarter 2025, the company paid $750 million under an accelerated share repurchase program, which completed in April 2025 with a total of 24,109,817 shares repurchased at an average price of $31.11. The company announced its intention to launch an additional $1.5 billion accelerated share repurchase in the second quarter of 2025, expected to be completed by the end of July 2025.
06—Continue