01—Abstract
Summary
Summary of the 10-Q filed October 23, 2025. Cited figures are marked; the original filing is the authoritative source.
Southwest Airlines Co. reported third quarter 2025 net income of $54 milliona, or $0.10 per diluted share, down from $67 million, or $0.11, in the prior-year quarter.
Total operating revenues reached $6.95 billionb, which the filing describes as an all-time third quarter company record, up $79 million, or 1.1 percent, year over year. Operating income was $35 million versus $38 million, as operating expenses rose $82 million, or 1.2 percent, driven mainly by higher Salaries, wages, and benefits and Landing fees and airport rentals, partly offset by lower Fuel and oil expense. For the nine months, net income was $118 million versus $204 million, with interest income down $220 million as cash and investment balances fell.
The balance sheet shows cash and cash equivalents of $2.90 billionc at September 30, 2025, down from $7.51 billion at December 31, 2024, reflecting $2.5 billion of share repurchases and $2.6 billion of debt payments in the nine months, including the $1.6 billion Convertible Notes repayment and the $976 million PSP1 Payroll Support Program loan redemption. Total stockholders' equity fell to $7.78 billion from $10.35 billion. Operating cash flow improved to $1.55 billion for the nine months from a $14 million use a year earlier.
The company closed its fuel hedging portfolio in the second quarter, so it is now fully exposed to jet fuel prices, and it reported a working capital deficit of approximately $5.6 billiond, which the filing attributes to the nature of air traffic liability. The filing states 2025 EBIT guidance of $600 million to $800 million, excluding special items, and fourth quarter 2025 unit revenue growth of up 1 percent to 3 percent on capacity up roughly 6 percent. It also notes a $2.0 billion share repurchase authorization approved July 23, 2025, of which $1.75 billion remained at September 30, 2025, and a 2025 capital spending range of $2.5 billion to $3.0 billion.
02—Key points
Key Highlights
- Third quarter 2025 net income was $54 million ($0.10 per diluted share), versus $67 million ($0.11) in third quarter 2024; operating income was $35 million versus $38 million.
- Total operating revenues of $6.95 billion, up $79 million or 1.1 percent, described as an all-time third quarter company record, driven primarily by bag fee revenue following the May 28, 2025 checked bag policy change.
- Nine-month net income declined to $118 million from $204 million, with interest income down $220 million due to lower cash and investment balances.
- Cash and cash equivalents fell to $2.90 billion from $7.51 billion at December 31, 2024, after $2.5 billion in share repurchases and $2.6 billion in debt and finance lease payments during the nine months.
- Operating cash flow for the nine months was $1.55 billion, compared with a $14 million use a year earlier.
- The company fully exited fuel hedging in the second quarter of 2025 and is now fully exposed to jet fuel price changes; 2025 EBIT guidance is $600 million to $800 million.
- A $2.0 billion share repurchase authorization was approved July 23, 2025, with $1.75 billion remaining at September 30, 2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed October 23, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $6.95B$6.87B | +1.1% |
| Operating Income | $35.00M$38.00M | −7.9% |
| Net Income | $54.00M$67.00M | −19.4% |
| EPS (Basic) | $0.10$0.11 | −9.1% |
| EPS (Diluted) | $0.10$0.11 | −9.1% |
| Shares Outstanding (Basic) | 523.00M599.00M | −12.7% |
| Shares Outstanding (Diluted) | 526.00M601.00M | −12.5% |
05—Questions
Frequently Asked Questions
How did Southwest perform in the third quarter of 2025 compared with the prior year?
Revenue reached a third quarter record of $6.95 billion, up 1.1 percent, but operating income fell to $35 million from $38 million and net income fell to $54 million from $67 million. Operating expenses rose $82 million, or 1.2 percent, mainly from higher salaries, wages, and benefits and landing fees and airport rentals, partly offset by lower fuel expense.
What is the company's outlook for the remainder of 2025?
The company expects fourth quarter 2025 unit revenues up 1 percent to 3 percent on capacity up approximately 6 percent, and fourth quarter CASM-X up 1.5 percent to 2.5 percent. Full year 2025 EBIT, excluding special items, is estimated at $600 million to $800 million, and 2025 capital spending is expected between $2.5 billion and $3.0 billion.
How did the company use its cash during the first nine months of 2025?
Cash and cash equivalents declined by $4.61 billion. The company repurchased $2.5 billion of common stock, repaid $2.6 billion of debt and finance lease obligations (including the $1.6 billion Convertible Notes and the $976 million PSP1 loan), paid $399 million in dividends, and spent $1.8 billion on capital expenditures, while generating $1.55 billion from operations.
What are the main risks to the company's financial results disclosed in the filing?
The company has no remaining fuel hedges and is fully exposed to jet fuel price changes; a one-cent per gallon change would affect fourth quarter fuel expense by approximately $5.5 million. The filing also cites Boeing delivery delays, particularly for the 737-7 pending FAA certification, and a $5.6 billion working capital deficit, which it says is typical for airlines. Several litigation matters are ongoing, and the company says none is expected to have a material adverse effect, though an adverse outcome could be material.
Did the company change its capital return program in 2025?
Yes. Under the $2.5 billion authorization completed in the second quarter, the company repurchased $1.5 billion through an accelerated share repurchase in April 2025 and paid $1.5 billion across two earlier programs. On July 23, 2025, the board approved a new $2.0 billion authorization, and a $250 million accelerated share repurchase under it was launched in September 2025 and completed in October 2025. Quarterly dividends of $0.18 per share continued.
06—Continue