Southwest Airlines (LUV) Q4 2025 earnings summary

Executive summary

• Achieved record operating revenues of $7.4 billion for Q4 and $28.1 billion for the full year 2025, with full-year adjusted EBIT of $574 million, exceeding prior guidance.

• Achieved full year 2025 net income of $441 million ($0.79 EPS) and adjusted net income of $512 million ($0.93 adjusted EPS).

• Implemented major business transformation initiatives: bag fees, basic economy, assigned and extra legroom seating, and loyalty program optimization.

• Returned $2.9 billion to shareholders via dividends and share repurchases, representing 14% of shares outstanding.

• Ranked #1 in The Wall Street Journal Best U.S. Airlines of 2025, with industry-leading operational reliability.

Financial highlights

• Q4 EBIT reached $386 million; full year adjusted EBIT was $574 million.

• Record quarterly and full year operating revenues of $7.4 billion and $28.1 billion, up 7.4% and 2.1% year-over-year.

• Q4 and full year adjusted net income of $301 million and $512 million, or $0.58 and $0.93 per diluted share.

• Q4 RASM down 0.2% year-over-year due to FAA-mandated schedule cuts; Q1 2026 RASM expected to increase at least 9.5%.

• Ended 2025 with $3.2 billion in cash and a gross leverage ratio of 2.4x.

Outlook and guidance

• 2026 adjusted EPS guidance of at least $4.00, up more than 300% over 2025.

• Q1 2026 adjusted EPS forecast at least $0.45; ASMs up 1–2% and RASM up at least 9.5% year-over-year.

• CASM-ex projected to rise ~3.5% year-over-year in Q1 2026, with management headcount expense flat to 2025.

• 66 Boeing 737-8 deliveries and 60 retirements planned for 2026; net capital spending expected at $3–$3.5 billion.