Southwest Airlines Co. (LUV) Bundle
A Brief History of Southwest Airlines Co.
Company Overview
Founded in 1967, Southwest Airlines Co. (LUV) has become a major player in the airline industry, known for its low-cost fares and no-frills service. As of 2024, the company operates over 800 aircraft and serves more than 100 destinations across the United States and several international locations.
Recent Financial Performance
For the nine months ended September 30, 2024, Southwest Airlines reported operating revenues of $20.51 billion, a 10.0% increase from $18.64 billion in the same period in 2023. The company’s net income for this period was $204 million, a decline of 71.5% compared to $717 million in 2023. The diluted earnings per share decreased from $1.15 to $0.34, reflecting the impact of rising operational costs.
| Financial Metrics | 9 Months Ended September 30, 2024 | 9 Months Ended September 30, 2023 | Change (%) |
|---|---|---|---|
| Operating Revenues (in billions) | $20.51 | $18.64 | 10.0% |
| Net Income (in millions) | $204 | $717 | (71.5%) |
| Diluted EPS | $0.34 | $1.15 | (70.4%) |
Operational Highlights
In Q3 2024, Southwest Airlines achieved record operating revenues of $6.9 billion, an increase of 5.3% year-over-year. This growth was driven by a 2.4% increase in available seat miles (ASMs) and a 5.7% rise in passenger revenues. The load factor for this quarter was 81.2%, showing a slight improvement from 80.7% in Q3 2023.
| Operational Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Operating Revenues (in billions) | $6.9 | $6.55 | 5.3% |
| Passenger Revenue (in billions) | $6.29 | $5.95 | 5.7% |
| Load Factor (%) | 81.2 | 80.7 | 0.5 pts |
Cost Analysis
Operating expenses for the first nine months of 2024 totaled $20.51 billion, marking a 10.0% increase from the previous year. Salaries, wages, and benefits accounted for a significant portion of this increase, rising by 12.8% to $4.51 billion due to new labor contracts and increased capacity. Fuel costs per gallon decreased from $3.61 to $3.40, contributing to a slight reduction in overall fuel expenses despite an increase in consumption.
| Cost Metrics | 9 Months Ended September 30, 2024 | 9 Months Ended September 30, 2023 | Change (%) |
|---|---|---|---|
| Operating Expenses (in billions) | $20.51 | $18.64 | 10.0% |
| Salaries and Benefits (in billions) | $4.51 | $4.00 | 12.8% |
| Fuel Costs per Gallon | $3.40 | $3.61 | (5.8%) |
Market Position and Future Outlook
As of 2024, Southwest Airlines remains one of the largest domestic airlines, focusing on maintaining low fares while expanding its network. The company is projected to continue facing challenges from rising operational costs and competitive pressures in the airline industry. The estimated economic fuel costs for the fourth quarter of 2024 are projected to be between $2.25 and $2.35 per gallon.
| Future Projections | 4Q 2024 |
|---|---|
| Estimated Economic Fuel Costs per Gallon | $2.25 - $2.35 |
| RASM Growth (%) | 3.5% - 5.5% |
| Projected ASMs Change (%) | ~Down 4% |
Despite the challenges, Southwest Airlines is committed to enhancing operational efficiency and customer service as it navigates the evolving landscape of the aviation market.
A Who Owns Southwest Airlines Co. (LUV)
Major Shareholders
As of 2024, the ownership structure of Southwest Airlines Co. (LUV) is characterized by a mix of institutional and individual investors. The largest shareholders include:
- The Vanguard Group, Inc. - Approximately 8.9% ownership
- BlackRock, Inc. - Approximately 8.6% ownership
- State Street Corporation - Approximately 4.5% ownership
- Wellington Management Company, LLP - Approximately 4.4% ownership
- Other Institutional Investors - Totaling approximately 70% of shares owned by institutional investors
Insider Ownership
Insider ownership is also significant, with key executives and board members holding shares. As of the latest reports:
- Gary Kelly (Former Chairman and CEO) - owns approximately 0.5% of shares
- Robert Jordan (Current CEO) - owns approximately 0.3% of shares
- Other executives and board members - collectively hold about 1% of shares
Stock Performance
As of early 2024, Southwest Airlines (LUV) stock is trading at approximately $45 per share. The stock has shown the following performance metrics:
| Metric | Value |
|---|---|
| Market Capitalization | $28 billion |
| 52-week Range | $30 - $55 |
| Current Dividend Yield | 1.6% |
| P/E Ratio (TTM) | 15.2 |
| EPS (TTM) | $2.95 |
Recent Developments
In October 2024, Southwest Airlines entered into a Cooperation Agreement with Elliott Investment Management L.P., which may influence future ownership dynamics and potential strategic directions for the company.
Financial Overview
For the third quarter of 2024, Southwest Airlines reported the following financial results:
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Operating Income | $38 million | $117 million | -67.5% |
| Net Income | $67 million | $193 million | -65.3% |
| Net Income per Share (Diluted) | $0.11 | $0.31 | -64.5% |
| Operating Revenues | $6.9 billion | $6.55 billion | +5.3% |
Conclusion of Ownership Structure
The ownership of Southwest Airlines Co. is predominantly held by institutional investors, with significant insider ownership as well. The company's stock performance and financial metrics reflect its current market standing and operational challenges, particularly in light of increased operational costs and competitive pressures in the airline industry.
Southwest Airlines Co. (LUV) Mission Statement
As of 2024, Southwest Airlines Co. (LUV) continues to embody its mission of providing a safe, reliable, and affordable air travel experience while maintaining a unique corporate culture that emphasizes customer service and employee satisfaction. The company aims to be the most loved, most flown, and most profitable airline in the world.
Current Mission Statement
Southwest Airlines' mission statement emphasizes:
- Customer Service: Delivering a high-quality travel experience.
- Employee Engagement: Fostering a culture of respect and teamwork.
- Operational Excellence: Ensuring efficiency and reliability in all operations.
- Affordability: Providing low-cost fares without compromising service quality.
Financial Overview
In Q3 2024, Southwest Airlines reported total operating revenues of $6.9 billion, marking a 5.3% increase year-over-year. This was driven by a record passenger revenue of $6.25 billion during the same period.
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Operating Revenues | $6.9 billion | $6.55 billion | 5.3% |
| Passenger Revenues | $6.25 billion | $5.91 billion | 5.7% |
| Operating Income | $38 million | $117 million | -67.5% |
| Net Income | $67 million | $193 million | -65.3% |
| Net Income per Share (Diluted) | $0.11 | $0.31 | -64.5% |
Operational Statistics
For the nine months ended September 30, 2024, significant operational metrics include:
| Operational Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Revenue Passengers Carried (000s) | 105,897 | 101,296 | 4.5% |
| Enplaned Passengers (000s) | 132,875 | 127,050 | 4.6% |
| Revenue Passenger Miles (RPMs) (millions) | 108,044 | 100,676 | 7.3% |
| Available Seat Miles (ASMs) (millions) | 133,717 | 124,810 | 7.1% |
| Load Factor (%) | 80.8% | 80.7% | 0.1 pts |
Future Outlook
Looking ahead to Q4 2024, Southwest Airlines anticipates the following financial guidance:
| Guidance Metric | Q4 2024 Estimate |
|---|---|
| RASM (Year-over-Year Change) | Up 3.5% to 5.5% |
| ASMs (Year-over-Year Change) | Down ~4% |
| Economic Fuel Costs per Gallon | $2.25 to $2.35 |
| Scheduled Debt Repayments (millions) | ~$5 |
| Interest Expense (millions) | ~$62 |
As of September 30, 2024, the company operated 811 aircraft and employed approximately 73,463 full-time equivalent employees.
How Southwest Airlines Co. (LUV) Works
Financial Performance
For the third quarter of 2024, Southwest Airlines reported operating revenues of $6.9 billion, marking a record for the company, driven by increased passenger revenues and overall passenger traffic. However, the operating income was $38 million, a decrease of 67.5% compared to the same period in 2023, where it was $117 million.
Net income for the third quarter was reported at $67 million, down 65.3% from $193 million in the prior year. The diluted net income per share was $0.11 compared to $0.31 in 2023.
Operational Statistics
In the nine months ending September 30, 2024, Southwest carried 105,897 thousand revenue passengers, a 4.5% increase from 101,296 thousand in the same period of 2023. The total enplaned passengers reached 132,875 thousand, up 4.6% year-over-year.
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Revenue Passengers Carried (000s) | 105,897 | 101,296 | 4.5 |
| Enplaned Passengers (000s) | 132,875 | 127,050 | 4.6 |
| Revenue Passenger Miles (RPMs) (in millions) | 108,044 | 100,676 | 7.3 |
| Available Seat Miles (ASMs) (in millions) | 133,717 | 124,810 | 7.1 |
| Load Factor (%) | 80.8 | 80.7 | 0.1 pts |
Cost Structure
Operating expenses for the third quarter of 2024 totaled $6.832 billion, an increase of 6.6% from $6.408 billion in 2023. The cost per available seat mile (CASM) was 15.11 cents, compared to 14.51 cents in the previous year.
The breakdown of operating expenses per available seat mile for Q3 2024 is as follows:
| Expense Type | Cost per ASM (cents) | 2023 Cost per ASM (cents) | Change (%) |
|---|---|---|---|
| Salaries, Wages, and Benefits | 6.78 | 6.17 | 9.9 |
| Fuel and Oil | 3.14 | 3.54 | (11.3) |
| Maintenance Materials and Repairs | 0.74 | 0.74 | 0.0 |
| Landing Fees and Airport Rentals | 1.09 | 1.04 | 4.8 |
| Depreciation and Amortization | 0.97 | 0.85 | 14.1 |
| Other Operating Expenses | 2.39 | 2.17 | 10.1 |
Fuel Management
Fuel costs for Q3 2024 averaged $2.52 per gallon, down from $2.80 in 2023, representing a decrease of 10.0%. The economic fuel costs per gallon for the nine months ending September 30, 2024, were $2.74, compared to $2.85 in the same period of 2023.
Employee Metrics
As of September 30, 2024, Southwest Airlines employed 73,463 full-time equivalents, a slight decrease from 74,181 in 2023.
Aircraft Fleet
At the end of Q3 2024, the airline had a total of 811 aircraft in its fleet, a decrease from 817 in the previous year.
Future Outlook
For the fourth quarter of 2024, Southwest Airlines anticipates economic fuel costs per gallon to range from $2.25 to $2.35 and expects a year-over-year decrease in ASMs of approximately 4%.
| Fourth Quarter 2024 Estimation | Value |
|---|---|
| RASM (year-over-year) | Up 3.5% to 5.5% |
| ASMs (year-over-year) | Down ~4% |
| Economic Fuel Costs per Gallon | $2.25 to $2.35 |
| CASM-X (year-over-year) | Up 11% to 13% |
| Scheduled Debt Repayments (millions) | ~$5 |
| Interest Expense (millions) | ~$62 |
| Aircraft Count | 796 |
How Southwest Airlines Co. (LUV) Makes Money
Revenue Streams
Southwest Airlines generates revenue primarily through passenger service, ancillary services, and loyalty programs.
- Passenger revenue for the nine months ended September 30, 2024, totaled $18.673 billion, a 7.2% increase compared to the previous year.
- Other revenues increased by $38 million, or 2.2%, primarily driven by marketing revenue from its co-branded credit card.
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | Change |
|---|---|---|---|
| Passenger Revenue | $6,250 | $5,912 | +5.7% |
| Other Revenue | $538 | $526 | +2.3% |
| Total Operating Revenue | $6,900 | $6,555 | +5.3% |
Passenger Traffic and Capacity
For the nine months ended September 30, 2024, Southwest Airlines carried 105.897 million revenue passengers, a 4.5% increase from the previous year.
- Available seat miles (ASMs) increased by 7.1% to 133.717 billion miles.
- Revenue passenger miles (RPMs) increased by 7.3% to 108.044 billion miles.
- The load factor was approximately 80.8%, indicating efficient use of capacity.
Operating Expenses
Operating expenses for the nine months ended September 30, 2024, totaled $20.510 billion, a 10.0% increase year-over-year.
| Expense Category | Q3 2024 (in millions) | Q3 2023 (in millions) | Change |
|---|---|---|---|
| Salaries, Wages, and Benefits | $1,417 | $1,564 | -9.4% |
| Fuel and Oil | $1,079 | $958 | +12.6% |
| Maintenance | $335 | $326 | +2.8% |
| Landing Fees and Airport Rentals | $493 | $457 | +7.9% |
| Depreciation and Amortization | $438 | $375 | +16.8% |
| Other Operating Expenses | $1,079 | $958 | +12.6% |
Fuel Costs and Efficiency
Southwest Airlines' fuel costs per gallon, including taxes, averaged $2.55 in Q3 2024, down 8.3% from Q3 2023.
- Fuel consumed was approximately 1.663 billion gallons, an increase of 5.4%.
- Fuel efficiency improved, with ASMs per gallon increasing to 81-82.
Net Income Performance
For Q3 2024, the net income reported was $67 million, down 65.3% year-over-year.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income (in millions) | $67 | $193 | -65.3% |
| Net Income per Share, Diluted | $0.11 | $0.31 | -64.5% |
| Operating Income (in millions) | $38 | $117 | -67.5% |
Future Outlook
For the fourth quarter of 2024, Southwest Airlines anticipates:
- RASM (Revenue per ASM) growth of 3.5% to 5.5%.
- ASMs expected to decrease by approximately 4%.
- Economic fuel costs per gallon projected between $2.25 to $2.35.
Conclusion
Southwest Airlines continues to focus on operational efficiency and revenue generation through strategic capacity management and enhanced customer engagement initiatives.
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Article updated on 8 Nov 2024
Resources:
- Southwest Airlines Co. (LUV) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Southwest Airlines Co. (LUV)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Southwest Airlines Co. (LUV)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.