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Southwest Airlines 8-K Report, Financial Results (Jan 30, 2025)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed January 30, 2025
Period End
January 30, 2025
Security
LUV
In the record · 2016–202610-K1210-Q338-K204

LUV filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 204 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jul ’17Jul ’17
  2. Material agreement8-K · Jul ’20Jul ’20
  3. Leadership change8-K · Sep ’22Sep ’22
  4. Material agreement8-K · Nov ’26Nov ’26

01—Abstract

Summary

Summary of the 8-K filed January 30, 2025. Cited figures are marked; the original filing is the authoritative source.

Southwest Airlines Co. (NYSE: LUV) reported fourth quarter and full year 2024 results in this Item 2.02 filing.

Fourth quarter net income was $261 milliona, or $0.42 per diluted share, and full year net income was $465 million, or $0.76 per diluted share. Excluding special items, fourth quarter net income was $356 million ($0.56 per diluted share) and full year net income was $597 million ($0.96 per diluted share). Fourth quarter and full year operating revenues were records at $6.9 billion and $27.5 billion, respectively, and rose to $7.0 billion and $27.6 billion excluding special items.

Fourth quarter RASM excluding special items increased 8.0 percent year-over-year, which the company said was better than its prior guidance range. The company guided to first quarter 2025 RASM up 5 to 7 percent and CASM-X up 7 to 9 percent year-over-year, with first quarter capacity down 2 to 3 percent. For full year 2025, it projects operating margin excluding special items of 3 to 5 percent and after-tax ROIC of 5 to 8 percent, with 2027 targets of at least 10 percent operating margin and at least 15 percent ROIC.

The company also said it is working to accelerate and exceed its $500 millionb cost reduction target and expects to exit 2025 with CASM-X growth in the low-single digits. Liquidity was $9.7 billion against debt outstanding of $6.7 billion, and the company returned $680 million to shareholders in 2024.

It announced a $750 millionc accelerated share repurchase under a $2.5 billion authorization, with the initial $250 million now complete. The filing also reports a planning assumption of 38 Boeing 737-8 deliveries in 2025, against a contractual order book of 136 aircraft for that year, and an estimated 2025 gross capital spending range of $2.5 billion to $3.0 billion.

02—Key points

Key Highlights

  1. Fourth quarter net income of $261 million ($0.42 diluted EPS); excluding special items, $356 million ($0.56 diluted EPS), up from $237 million in the prior-year quarter
  2. Record fourth quarter and full year operating revenues of $6.9 billion and $27.5 billion; RASM excluding special items rose 8.0 percent year-over-year in the fourth quarter
  3. Fourth quarter CASM-X increased 11.1 percent year-over-year, driven primarily by elevated labor cost pressure and lower capacity; the company expects 1Q 2025 CASM-X up 7 to 9 percent
  4. 2025 guidance: operating margin excluding special items of 3 to 5 percent and after-tax ROIC of 5 to 8 percent; 2027 targets of at least 10 percent operating margin and at least 15 percent ROIC
  5. Liquidity of $9.7 billion versus $6.7 billion of debt outstanding; net cash position of $2.0 billion and leverage of 43 percent at December 31, 2024
  6. Announced a $750 million accelerated share repurchase under a $2.5 billion authorization, with the initial $250 million complete; $680 million returned to shareholders in 2024
  7. Planning assumption of 38 Boeing 737-8 deliveries in 2025 versus a contractual order book of 136 aircraft for 2025; 2025 gross capital spending estimated at $2.5 billion to $3.0 billion

03—Questions

Frequently Asked Questions

  1. How did Southwest perform in the fourth quarter of 2024?

    Fourth quarter net income was $261 million, or $0.42 per diluted share. Excluding special items, net income was $356 million, or $0.56 per diluted share. Operating revenues reached a fourth quarter record of $6.9 billion, and RASM excluding special items increased 8.0 percent year-over-year.

  2. What is the company's near-term outlook for unit revenues and costs?

    For first quarter 2025, the company expects RASM to increase 5 to 7 percent year-over-year and CASM-X to increase 7 to 9 percent year-over-year. Capacity is expected to decrease 2 to 3 percent in the first quarter, and increase 1 to 2 percent for full year 2025.

  3. What are the company's longer-term financial targets?

    For 2027, the company targets operating margin excluding special items of at least 10 percent and after-tax ROIC of at least 15 percent. For full year 2025, it estimates operating margin of 3 to 5 percent and after-tax ROIC of 5 to 8 percent.

  4. How is Southwest returning capital to shareholders?

    The company returned $680 million in 2024, comprised of $430 million of dividends and $250 million of share repurchases. It announced a $750 million accelerated share repurchase under its $2.5 billion authorization, with the initial $250 million now complete.

  5. What is the company's liquidity and balance sheet position?

    The company ended 2024 with $9.7 billion of liquidity, well in excess of $6.7 billion of debt outstanding. It reported a net cash position of $2.0 billion and adjusted debt to invested capital of 43 percent as of December 31, 2024.

04—Continue

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