Southwest Airlines (LUV) Q4 2024 earnings summary

Executive summary

• Fourth quarter and full year 2024 performance exceeded expectations, with improved year-over-year margins, strong operational execution, and net income of $261M and $465M; adjusted net income of $356M and $597M, respectively.

• Record Q4 and full year operating revenues of $6.9B and $27.5B; adjusted revenues of $7.0B and $27.6B.

• The Southwest Even Better plan is underway, focusing on efficiency, cost reduction, customer experience, and new revenue streams, including partnerships and premium products.

• Returned $680M to shareholders via dividends and buybacks; announced $750M accelerated share repurchase.

• 2025 to be pivotal with focus on transformation, cost reduction, and enhanced customer experience.

Financial highlights

• Fourth quarter 2024 unit revenue (RASM) increased 8% year-over-year, surpassing guidance and historical trends; Q4 CASM-ex rose 11.1% year-over-year.

• Q4 net income: $261M ($0.42/share); full year: $465M ($0.76/share); adjusted Q4 net income: $356M ($0.56/share); full year: $597M ($0.96/share).

• Q4 operating income: $278M; full year: $321M; Q4 operating margin (adjusted): 5.6%; full year: 1.7%.

• Full year 2024 gross capital expenditures were $2.1B, with net capital expenditures at $1.2B.

• $680M returned to shareholders in 2024 via $430M in dividends and $250M in share repurchases.

Outlook and guidance

• 2025 first quarter RASM projected to rise 5%-7% year-over-year, with positive RASM growth expected throughout the year; full year 2025 RASM up 3–5%.

• CASM-ex for first quarter 2025 expected to increase 7%-9% year-over-year, with cost inflation easing as the year progresses and exiting 2025 at low single-digit growth.

• Modest capacity growth of 1%-2% year-over-year planned for 2025, fully funded by efficiency initiatives; 2027 annual capacity growth target 1–2%.

• 2025 economic fuel cost per gallon: $2.45–$2.55; 47% fuel hedged.

• Targeting $1B 2025 EBIT contribution from core business initiatives and $1.5B total incremental EBIT including fleet strategy.