Southwest Airlines Reports Upbeat Q4 Earnings, Record Revenues: Retail’s Overjoyed

Southwest Airlines Co (LUV) reported an upbeat fourth-quarter earnings report on Thursday, with fourth-quarter and full-year operating revenues hitting record levels. However, the airline’s stock traded over 1% lower in Thursday’s pre-market session.

Earnings per share (EPS) came in at $0.56 compared to an analyst estimate of $0.46, according to FinChat.

Operating revenue rose 1.65% year-over-year (YoY) to $6.93 billion compared to an analyst estimate of $6.95 billion.

The airline reported a net income of $261 million compared to a net loss of $252 million in the same quarter a year ago.

The airline’s fourth-quarter (Q4) revenue per available seat mile (RASM), excluding special items, increased 8% YoY to $0.1619—better than the company's previous guidance range.

Southwest also announced a $750 million accelerated share repurchase program (ASR) under its $2.5 billion share repurchase authorization.

Meanwhile, Q4 economic fuel costs were $2.42 per gallon, in line with its previous guidance range.

Southwest also said its Q4 cost per available seat mile (CASM-X) rose 11.1% YoY, including a $92 million gain from a sale-leaseback transaction. The increase was led by elevated labor cost pressure and lower capacity levels in the fourth quarter.

CEO Bob Jordan said the improvements from the firm’s tactical initiatives are materializing faster than expected, and its progress continues to be further supported by a constructive demand environment and industry backdrop.

“…we are working to accelerate and exceed our 2027 $500 million cost reduction target, supporting a 2025 CASM-X exit rate in the low-single digits,” he said.

The airline expects first-quarter RASM to rise 5% to 7% YoY. “The expected year-over-year improvement is driven primarily by a focus on capacity rationalization and the company's continued focus on executing its tactical initiatives. The company also anticipates continued strength in the demand environment,” Southwest said.

First quarter CASM-X is expected to increase 7% to 9% YoY, driven primarily by the continuation of inflationary pressures, including those associated with labor contracts ratified in 2024, and from capacity moderation efforts.

Following the earnings release, retail sentiment on Stocktwits climbed into the ‘extremely bullish’ territory (82/100), accompanied by ‘extremely high’ retail chatter.

LUV’s Sentiment Meter and Message Volume as of 9:12 a.m. ET on Jan. 30, 2025 | Source: Stocktwits

Southwest Airlines shares have lost over 5% so far this year and have gained nearly 5% over the past year.

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