01—Abstract
Summary
Summary of the 8-K filed April 22, 2026. Cited figures are marked; the original filing is the authoritative source.
Southwest Airlines Co. (NYSE: LUV) furnished a press release as Exhibit 99.1 under Item 2.02 reporting first quarter 2026 results.
The company reported net income of $227 milliona, or $0.45 diluted EPS, on operating revenues of $7.2 billion, a first-quarter record and up 12.8% year-over-year. Operating margin was 4.6%, an improvement of 8.1 points from the prior year, and operating cash flow was $1.4 billion. Management attributed the results to new product offerings, record passenger and unit revenues, and cost discipline, despite fuel cost per gallon of $2.73 versus prior guidance of approximately $2.40.
For the second quarter of 2026, the company guided adjusted EPS to a range of $0.35 to $0.65b, based on the forward fuel curve as of April 16, with fuel cost per gallon assumed between $4.10 and $4.154. RASM is expected to rise 16.5% to 18.5% year-over-year, and CASM-X is expected to rise 3.5% to 4.0%. The company said updating its full-year adjusted EPS guidance of $4.00 would not be productive given macroeconomic uncertainty, and it now expects full-year 2026 capacity growth of approximately 2%, at the low end of its prior 2% to 3% guidance.
On the balance sheet, the company ended the quarter with $3.3 billionc in cash and cash equivalents and leverage of 2.2x. It repurchased $1.25 billion in shares and paid $93 million in dividends during the quarter, with $450 million remaining under its $2.0 billion repurchase authorization. Total stockholders' equity fell to $6.9 billion from $8.0 billion at year-end 2025, largely reflecting share repurchases that exceeded net income.
02—Key points
Key Highlights
- Net income of $227 million and diluted EPS of $0.45, compared with a net loss of $149 million and diluted loss of $0.26 in the first quarter of 2025.
- Operating revenues of $7.2 billion, a first-quarter record, up 12.8% year-over-year; passenger revenues of $6.6 billion, up 13.4%.
- Operating margin of 4.6%, an improvement of 8.1 points year-over-year; operating cash flow of $1.4 billion, compared with $860 million a year earlier.
- Fuel cost of $2.73 per gallon, above prior guidance of approximately $2.40, adding $164 million to fuel expense and an approximate $0.22 EPS headwind.
- Second quarter 2026 adjusted EPS guidance of $0.35 to $0.65; full-year adjusted EPS guidance of $4.00 was not updated.
- Returned over $1.3 billion to shareholders in the quarter through $1.25 billion in share repurchases and $93 million in dividends.
- Ended the quarter with $3.3 billion in cash and cash equivalents, a $1.5 billion revolving credit line, and leverage of 2.2x; entered a $500 million aircraft-secured term loan.
03—Questions
Frequently Asked Questions
How did Southwest perform financially in the first quarter of 2026?
Southwest reported net income of $227 million, or $0.45 per diluted share, compared with a net loss of $149 million in the first quarter of 2025. Operating revenues rose 12.8% to $7.2 billion, and operating margin reached 4.6%, up 8.1 points year-over-year.
What is the company's guidance for the second quarter of 2026?
Southwest guided second quarter adjusted EPS to $0.35 to $0.65, based on the forward fuel curve as of April 16. It expects RASM to increase 16.5% to 18.5% year-over-year and CASM-X to increase 3.5% to 4.0%, with fuel cost per gallon assumed between $4.10 and $4.154.
Did the company update its full-year 2026 earnings guidance?
No. The company said that updating its full-year adjusted EPS guidance of $4.00 would not be productive at this time given macroeconomic uncertainty, and that achieving that outcome would require lower fuel prices and/or stronger revenue performance. It did, however, now expect full-year capacity growth of approximately 2%, at the low end of its prior 2% to 3% guide.
How much did Southwest return to shareholders and how much buyback authorization remains?
Southwest repurchased $1.25 billion in shares and paid $93 million in dividends during the first quarter of 2026. A total of $450 million remains outstanding under its $2.0 billion share repurchase authorization.
What are the main drivers of the results and the key cost pressures?
Management credited new product offerings, including assigned and extra legroom seating launched January 27, 2026, for record revenues and unit revenue growth. Fuel was the main cost pressure: fuel cost per gallon was $2.73 versus prior guidance of approximately $2.40, adding $164 million to fuel expense.
04—Continue