01—Abstract
Summary
Summary of the 8-K filed January 28, 2026. Cited figures are marked; the original filing is the authoritative source.
Southwest Airlines Co. reported fourth quarter and full year 2025 results in a press release furnished as Exhibit 99.1 to this Form 8-K.
For full year 2025, the company reported net income of $441 milliona, or $0.79 per diluted share, and adjusted net income (excluding special items) of $512 million, or $0.93 per diluted share. Full year 2025 adjusted EBIT was $574 million, which the company describes as above prior guidance of $500 million. Operating revenues were a record $28.1 billion for the full year and a record $7.4 billion for the fourth quarter.
Fourth quarter net income was $323 millionb, or $0.61 per diluted share. The company's 2026 guidance calls for adjusted EPS of at least $4.00, which it says represents the lower end of internal forecasts and is well above Wall Street consensus according to the release. The guidance is tied to a 2025 transformation that included bag fees, a basic economy fare, assigned and extra legroom seating (operational as of January 27, 2026), Rapid Rewards changes, and online distribution expansion.
For the first quarter of 2026, the company forecasts adjusted EPS of at least $0.45c, RASM up at least 9.5% year-over-year, and CASM-X up approximately 3.5%. Management says it will provide range-bound full-year guidance when current quarterly results are reported, if not earlier. The release notes the impact of Winter Storm Fern on the outlook.
On capital and balance sheet matters, the company ended 2025 with $3.2 billiond in cash and cash equivalents and leverage of 2.4x (adjusted debt to adjusted EBITDAR). It returned $2.9 billion to shareholders through share repurchases ($2.6 billion) and dividends ($399 million) in 2025, and it expects 2026 net capital spending of $3.0 billion to $3.5 billion. The company also discontinued its fuel hedging program and expects 66 Boeing 737-8 deliveries in 2026.
02—Key points
Key Highlights
- Full year 2025 net income of $441 million ($0.79 diluted EPS) and adjusted net income of $512 million ($0.93 adjusted diluted EPS), versus GAAP net income of $465 million in 2024.
- Full year 2025 adjusted EBIT of $574 million, above prior guidance of $500 million.
- 2026 adjusted EPS guidance of at least $4.00, which the company says is at the lower end of internal forecasts and well above Wall Street consensus.
- First quarter 2026 guidance: adjusted EPS of at least $0.45, RASM up at least 9.5% year-over-year, and CASM-X up approximately 3.5% year-over-year.
- Record full year 2025 operating revenues of $28.1 billion and record fourth quarter operating revenues of $7.4 billion, with passenger revenues up 7.6% in the fourth quarter.
- Returned $2.9 billion to shareholders in 2025 ($2.6 billion in share repurchases and $399 million in dividends); ended 2025 with $3.2 billion in cash and leverage of 2.4x.
- Expects 2026 net capital spending of $3.0 billion to $3.5 billion and 66 Boeing 737-8 deliveries, with approximately 60 aircraft retirements planned.
03—Questions
Frequently Asked Questions
What drove the 2026 earnings outlook?
The company attributes its outlook to the 2025 transformation, including bag fees, a basic economy fare, assigned and extra legroom seating, Rapid Rewards optimization, and expanded online distribution. It also cites strong first quarter bookings and expects earnings upside from close-in bookings and growth in business and leisure segments as the new seating product matures.
How does the 2026 guidance compare with 2025 results?
The release states that 2026 adjusted EPS guidance of at least $4.00 is up more than 300% over 2025 adjusted EPS of $0.93.
What factors could affect near-term results?
The release says the first quarter and full year 2026 guidance include the impact of Winter Storm Fern. First quarter CASM-X includes a 1.1 point impact from removing six seats from Boeing 737-700 aircraft to enable extra legroom seating. Fourth quarter 2025 fuel cost of $2.45 per gallon was above the company's previous guidance range, and first quarter 2026 fuel cost is assumed at approximately $2.405 per gallon.
When will the company provide full-year 2026 range-bound guidance?
Management says it will provide range-bound guidance for 2026 when current quarterly results are reported, if not earlier, and expects better visibility into the upside potential from its new seating and product initiatives within the next month or so.
What is the company's capital return and balance sheet position?
The company repurchased $2.6 billion of shares and paid $399 million in dividends in 2025, retired $3.3 billion of debt and finance lease obligations, and issued $1.5 billion of unsecured bonds in November 2025. It ended 2025 with leverage of 2.4x and intends to opportunistically repurchase shares while staying within guardrails that support its investment-grade rating.
04—Continue