DALLAS, July 23, 2025 /PRNewswire/ — Southwest Airways Co. (NYSE: LUV) (the “Firm”) at the moment reported its second quarter 2025 monetary outcomes and Firm highlights:
Web earnings of $213 million, or $0.39 earnings per diluted share
Web earnings, excluding particular items1, of $230 million, or $0.43 earnings per diluted share
Returned $1.6 billion to Shareholders by a mix of share repurchases and dividends
Launched bag charges with monetary profit exceeding expectations and no detrimental operational influence
Rolled out new primary financial system product construction, laying the muse for future product differentiation
Sustaining targets of $1.8 billion full yr 2025 and $4.3 billion full yr 2026 incremental earnings earlier than curiosity and taxes, excluding particular gadgets (“EBIT”2) contribution from slate of initiatives
Whereas early, current business demand reveals indicators of enchancment off of depressed second quarter 2025 ranges, which mixed with moderated capability throughout the business and Southwest-specific initiatives, creates a constructive backdrop for the second half of the yr
Offering up to date full yr 2025 steering for EBIT2 within the vary of $600 million to $800 million
Board of Administrators licensed a brand new $2.0 billion share repurchase program anticipated to be accomplished over a interval of as much as two years
Bob Jordan, President, Chief Govt Officer, & Vice Chairman of the Board of Administrators, said, “We continued to make significant progress in opposition to our transformational plan in second quarter, most notably implementing bag charges and a primary financial system product. We had an distinctive operational rollout and continued to ship excellent service—a testomony to our Folks. These initiatives are coming on-line shortly, and we’re happy with efficiency so far, together with bag payment income exceeding expectations. We’re inspired by the incremental fare product purchase up that’s already occurring at this early stage and upfront of assigned and premium seating that we are going to start promoting subsequent week for flights starting January 2026. We now have already realized roughly one-third of our $1.8 billion 2025 initiative EBIT2 goal in first half 2025 and stay extremely assured in our capacity to comprehend the remaining quantity throughout the second half of the yr, in response to our plan. The worth of those initiatives accelerates all through second half 2025 and much more meaningfully into 2026. Underscoring perception in our transformational plan, robust administration execution, and the power to ship vital worth for Shareholders, our Board of Administrators has licensed a brand new $2.0 billion share repurchase program, anticipated to be accomplished over a interval of as much as two years.”
Steerage and Outlook:
The next tables present choose monetary steering for third quarter 2025 and full yr 2025, and choose full yr 2025 and 2026 targets.
Key Initiative Highlights:
Launched bag charges with preliminary monetary profit exceeding expectations
Applied primary financial system product, laying the muse for future product differentiation
Reintroduced flight credit score expiration
Introduced partnership with China Airways and three new gateways for Icelandair partnership
Accomplished retrofits of greater than 220 plane for additional legroom seating
Introduced promote date of July 29, 2025, for assigned and premium seating, for journey starting January 27, 2026
Introduced intention to begin new service at Cyril E. King Worldwide Airport on St. Thomas starting early subsequent yr
Accomplished the September 2024 $2.5 billion share repurchase authorization in second quarter 2025, repurchasing the remaining $1.5 billion by an accelerated share repurchase program. Last settlement of shares bought by the second quarter 2025 accelerated share repurchase program is anticipated to happen by the tip of July 2025
Income Outcomes and Outlook:
Second quarter 2025 passenger revenues have been $6.6 billion, a 1.3 p.c lower, year-over-year
Second quarter 2025 working revenues have been $7.2 billion, a 1.5 p.c lower, year-over-year
Second quarter 2025 RASM decreased 3.1 p.c on capability up 1.6 p.c, each year-over-year—consistent with the Firm’s earlier steering vary
Home leisure journey stabilized throughout second quarter 2025, with current traits displaying indicators of enchancment, and the Firm as soon as once more outperformed its giant business friends on home unit income. The Firm’s portfolio of lately applied initiatives offered incremental income in second quarter 2025 that’s anticipated to ramp up because the yr progresses.
Following the Could 28, 2025 launch of its primary financial system product, the Firm skilled a brief discount within the conversion price of primary financial system on its web site. The Firm took swift motion and refined its reserving movement and advertising and marketing strategy in an effort to scale back friction, in addition to supply further promotional exercise, and bookings and conversion charges shortly returned to anticipated ranges. This resulted in an influence to second quarter 2025 year-over-year RASM of almost one-half level, and an estimated influence to 3rd quarter 2025 year-over-year RASM of roughly one level.
The Firm expects third quarter 2025 unit revenues to be within the vary of down 2 p.c to up 2 p.c on roughly flat capability, each on a year-over-year foundation. This steering vary assumes a modest sequential enchancment in demand. Firm-specific initiatives present a novel offset to the broader business income influence, and can proceed to speed up all through third quarter 2025. Third quarter 2024 RASM included roughly one level of optimistic year-over-year influence from the CrowdStrike business occasion.
The Firm has offered full yr 2025 EBIT2 steering, in addition to a reconciliation to its earlier full yr information included within the supplies accompanying this launch. The Firm’s EBIT2 steering assumes additional sequential enchancment from third quarter 2025, pushed by accelerating incremental income from Firm-specific initiatives, the restoration of the non permanent primary financial system optimization influence, and anticipated enchancment in home leisure journey traits.
Non-Gas Prices and Outlook:
Second quarter 2025 working bills elevated 0.9 p.c, year-over-year, to $7.0 billion
Second quarter 2025 working bills, excluding gas and oil expense, particular gadgets, and revenue sharing1, elevated 6.4 p.c, year-over-year
Second quarter 2025 CASM-X elevated 4.7 p.c, year-over-year—consistent with the Firm’s earlier steering vary
The Firm’s second quarter 2025 CASM-X year-over-year enhance included an approximate one-half level headwind from a non-cash mark-to-market adjustment for nonqualified deferred compensation plans which was pushed by current robust inventory market efficiency.
The Firm continues to count on to realize its $370 million value discount goal this yr. The Firm anticipates third quarter 2025 CASM-X to extend within the vary of three.5 p.c to five.5 p.c, on roughly flat capability, each on a year-over-year foundation. This enhance is pushed primarily by the continuation of inflationary pressures, together with these related to labor contracts ratified in 2024, in addition to roughly one level from the timing of engine overhaul bills and one-half level from plane retrofit prices upfront of additional legroom seating launching in January 2026. Excluding the influence of ebook good points from fleet transactions within the fourth quarter of each years, the Firm continues to count on fourth quarter 2025 CASM-X to be up low-single digits, year-over-year. The Firm stays centered on driving efficiencies to offset total inflationary value pressures and obtain its multi-year value discount targets.
Gas Prices and Outlook:
Second quarter 2025 gas prices have been $2.32 per gallon—barely above the Firm’s earlier steering vary
Second quarter 2025 gas effectivity improved 2.9 p.c, year-over-year, primarily on account of working extra Boeing 737-8 (“-8”) plane, the Firm’s most fuel-efficient plane, as a share of its fleet
Throughout second quarter 2025, the Firm terminated its remaining portfolio of gas hedging contracts, which have been scheduled to settle by 2027, to successfully shut its gas hedging portfolio. The money proceeds from this transaction totaled roughly $40 million, which is able to scale back future premium prices. The remaining internet premium prices of roughly $209 million can be acknowledged as a rise to Gas and oil expense within the intervals the initially forecasted transactions happen, particularly $72 million within the second half of 2025, $115 million in 2026, and $22 million in 2027. As of June 30, 2025, the Firm had no gas hedging contracts excellent and its gas hedging program has been discontinued.
Capability, Fleet, and Capital Spending:
Second quarter 2025 capability elevated 1.6 p.c, year-over-year—consistent with the Firm’s earlier steering vary
The Firm obtained 17 -8 plane and retired seven Boeing 737-700 plane in second quarter 2025, ending the quarter with 810 plane
Second quarter 2025 capital expenditures have been $635 million, pushed primarily by aircraft-related capital spending, in addition to expertise, amenities, and operational investments
The Firm beforehand introduced proactive capability reductions within the second half of 2025 in an effort to raised accommodate the present demand surroundings and seize related value financial savings, and continues to count on full yr 2025 capability to be up roughly 1 p.c, year-over-year. This modest progress is pushed solely by a rise in plane utilization offered by redeye flying and switch time discount initiatives.
The Firm has up to date its fleet planning assumptions to 47 Boeing -8 plane deliveries in 2025, from its prior estimate of 38, as The Boeing Firm (“Boeing”) continues to ramp up manufacturing. With these incremental deliveries, the Firm now expects to retire roughly 55 plane in 2025, in contrast with its earlier estimate of roughly 50 retirements this yr. This consists of the sale of 5 Boeing 737-800 (“-800”) plane anticipated to happen within the second half of 2025. The Firm continues to count on further new plane deliveries to facilitate the retirement of plane from its current fleet in assist of its fleet monetization and capital allocation methods.
The Firm continues to count on its 2025 capital spending to be within the vary of $2.5 billion to $3.0 billion, together with the extra plane deliveries now anticipated, in addition to the influence of the anticipated sale of 5 -800 plane this yr.
Liquidity and Capital Deployment:
The Firm paid off $1.6 billion of convertible notes in money and pay as you go $976 million for the primary tranche of the Payroll Help Program notes in second quarter 2025
The Firm ended second quarter 2025 with $3.8 billion in money and money equivalents and short-term investments, and a totally obtainable revolving credit score line of $1.0 billion
The Firm returned $1.6 billion to its Shareholders throughout second quarter 2025, comprised of $103 million of dividends and $1.5 billion of share repurchases
The Firm accomplished its September 2024 $2.5 billion share repurchase authorization in second quarter 2025, repurchasing the remaining $1.5 billion by an accelerated share repurchase program. Last settlement of shares bought by the second quarter 2025 accelerated share repurchase program is anticipated to happen by the tip of July 2025.
The Firm’s capital allocation framework helps its continued dedication to a powerful and environment friendly investment-grade stability sheet. Transferring ahead, the Firm will goal liquidity of roughly $4.5 billion, comprised of money and money equivalents, short-term investments, and a revolving credit score line, which was lately elevated to $1.5 billion. The Firm will goal leverage1,5 within the vary of 1.0x to 2.5x adjusted debt to adjusted EBITDAR1,5. The Firm continues to have a big base of unencumbered plane and primarily aircraft-related belongings with a internet ebook worth of roughly $16.6 billion. The Firm’s Board of Administrators lately accredited a $2.0 billion share repurchase authorization anticipated to be accomplished over a interval of as much as two years, which is supported by this framework and anticipated ramp up in initiative profit.
Supplemental Data:
The Firm has offered a abstract on progress in opposition to initiative growth and element on its full yr 2025 EBIT2 steering on the Investor Relations web site at
Convention Name:
The Firm will talk about its second quarter 2025 outcomes on a convention name at 12:30 p.m. Japanese Time on July 24, 2025. To take heed to a dwell broadcast of the convention name, please go to
