Southwest Airlines Company has reported its third quarter 2024 financial results:

  • Net income of $67 million, or $0.11 per diluted share
  • Net income, excluding special items1, of $89 million, or $0.15 per diluted share
  • Record third quarter operating revenues of $6.9 billion
  • Liquidity2 of $10.4 billion, well in excess of debt outstanding of $8.0 billion
  • Announced a $250 million accelerated share repurchase program under the Company’s $2.5 billion share repurchase authorization

Bob Jordan, President, Chief Executive Officer, & Vice Chairman of the Board of Directors, stated, “It’s an exciting time for us as we execute on our ‘Southwest. Even Better.’ plan outlined last month at Investor Day. The transformational plan represents a culmination of the dedication and hard work of our Team. We are laser-focused on delivering the robust set of tactical and strategic initiatives included in our plan and returning to the strong financial performance we expect. We are fully committed to executing our plan and to reporting regularly on our progress. Our third quarter profit and strong operational results are reflective of the actions we are taking to deliver our plan and achieve our North Star goal of ROIC3 of at least 15 percent or greater, well above our cost of capital, in 2027. Based on our current progress, outlook, and confidence in our ability to execute our plan, we intend to repurchase an initial $250 million of Southwest common stock through an accelerated share repurchase program, which is under the $2.5 billion share repurchase authorization announced last month.”

Guidance and Outlook:
The following table provides selected financial guidance for fourth quarter 2024:

4Q 2024 Estimation 
RASM (a), year-over-year Up 3.5% to 5.5%
ASMs (b), year-over-year Down ~4%
Economic fuel costs per gallon1,4 $2.25 to $2.35
Fuel hedging premium expense per gallon $0.07
Fuel hedging cash settlement gains per gallon $0.01
ASMs per gallon (fuel efficiency) 81 to 82
CASM-X (c), year-over-year1,5 Up 11% to 13%
Scheduled debt repayments (millions) ~$5
Interest expense (millions) ~$62
Aircraft (d) 796
(a) Operating revenue per available seat mile (“RASM” or “unit revenues”).
(b) Available seat miles (“ASMs” or “capacity”). The Company’s flight schedule is published for sale through June 4, 2025. The Company expects first quarter 2025 capacity to decrease in the range of 1 percent to 3 percent, year-over-year.
(c) Operating expenses per available seat mile, excluding fuel and oil expense, special items, and profitsharing (“CASM-X”).
(d) Aircraft on property, end of period. The Company continues to plan for approximately 20 Boeing 737-8 (“-8”) aircraft deliveries and now expects 41 aircraft retirements in 2024, comprised of 37 Boeing 737-700s (“-700”) and four Boeing 737-800s (“-800”). The delivery schedule for the Boeing 737-7 (“-7”) is dependent on the Federal Aviation Administration (“FAA”) issuing required certifications and approvals to The Boeing Company (“Boeing”) and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and Boeing may continue to experience manufacturing challenges, so the Company offers no assurances that current estimations and timelines will be met.

Revenue Results and Outlook:

  • Third quarter 2024 operating revenues were a third quarter record of $6.9 billion, a 5.3 percent increase, year-over-year
  • Third quarter 2024 passenger revenues were a third quarter record of $6.3 billion, a 5.7 percent increase, year-over-year
  • Third quarter 2024 RASM increased 2.8 percent, year-over-year—within the Company’s previous guidance range

The Company’s record third quarter performance for both operating and passenger revenues was driven primarily by yield improvements from capacity moderation across the industry and progress in managing tactical initiatives to drive results. The Company’s third quarter 2024 RASM increased 2.8 percent, year-over-year, a solid sequential improvement, and at the better end of its recently improved guidance range of 2 percent to 3 percent, year-over-year.

The Company expects fourth quarter 2024 unit revenues to increase in the range of 3.5 percent to 5.5 percent on a year-over-year basis with capacity down approximately 4 percent, also on a year-over-year basis. This guidance range contemplates a headwind of just under one-half point from Hurricane Milton and the resulting Customer cancellations. Thus far in the quarter, travel demand remains healthy and bookings-to-date for the holiday season are strong, demonstrating the continued resilience of the leisure travel market. The guidance range represents another sequential year-over-year unit revenue improvement driven by the Company’s focus on tactical actions including network optimization and capacity moderation, marketing and distribution evolution, and continued efforts to advance revenue management techniques. 

Fuel Costs and Outlook:

  • Third quarter 2024 economic fuel costs were $2.55 per gallon1—within the Company’s previous guidance range—and included $0.07 per gallon in premium expense and $0.02 per gallon in favorable cash settlements from fuel derivative contracts
  • Third quarter 2024 fuel efficiency improved 1.5 percent, year-over-year, primarily due to more -8 aircraft, the Company’s most fuel-efficient aircraft, as a percentage of its fleet
  • As of October 16, 2024, the fair market value of the Company’s fuel derivative contracts settling in fourth quarter 2024 through the end of 2027 was an asset of $144 million

The Company’s multi-year fuel hedging program continues to provide protection against spikes in energy prices. The Company’s current fuel derivative contracts contain a combination of instruments based on West Texas Intermediate and Brent crude oil, and refined products, such as heating oil. The economic fuel price per gallon sensitivities4 provided in the table below assume the relationship between Brent crude oil and refined products based on market prices as of October 16, 2024.

Estimated economic fuel price per gallon, 
including taxes and fuel hedging premiums
Average Brent Crude Oil 
price per barrel
4Q 2024 2024
$60 $1.85 – $1.95 $2.50 – $2.60
$70 $2.05 – $2.15 $2.55 – $2.65
Current Market (a) $2.25 – $2.35 $2.60 – $2.70
$90 $2.70 – $2.80 $2.70 – $2.80
$100 $2.90 – $3.00 $2.75 – $2.85
$110 $3.10 – $3.20 $2.80 – $2.90
Fair market value of 
fuel derivative contracts settling in period
$8 million $57 million
Estimated premium costs $39 million $158 million
(a) Brent crude oil average market prices as of October 16, 2024, were $74 and $80 per barrel for fourth quarter and full year 2024, respectively.

In addition, the Company is providing its maximum percentage of estimated fuel consumption6 covered by fuel derivative contracts in the following table:

Period Maximum fuel hedged percentage (a)
2024 58 %
2025 47 %
2026 43 %
2027 Less than 10%
(a) Based on the Company’s current available seat mile plans. The Company is currently 59 percent hedged in fourth quarter 2024. 

Non-Fuel Costs and Outlook

  • Third quarter 2024 operating expenses increased 6.6 percent, year-over-year, to $6.8 billion
  • Third quarter 2024 operating expenses, excluding fuel and oil expense, special items, and profitsharing1, increased 14.3 percent, year-over-year
  • Third quarter 2024 CASM-X increased 11.6 percent, year-over-year—within the Company’s previous guidance range

The Company’s third quarter CASM-X increase came in at the better end of its previous expected range. The Company continues to take urgent steps to control costs, including offering voluntary time off programs and controlling hiring to address overstaffing. The Company also continues to expect savings from its cost plan announced last month to ramp up over the next three years to reach over $500 million in run rate cost savings in 2027.

The Company anticipates fourth quarter 2024 CASM-X to increase in the range of 11 percent to 13 percent, year-over-year, as cost pressures continue, particularly from new labor contracts. Fourth quarter CASM-X is further pressured by a 4 percent reduction in year-over-year capacity, as well as just over one-half point of unit cost headwind from flight cancellations associated with Hurricane Milton. 

The Company continues to estimate its full year 2024 effective tax rate to be approximately 24 percent. 

Capacity, Fleet, and Capital Spending:

  • Third quarter 2024 capacity increased 2.4 percent, year-over-year—in line with the Company’s previous guidance
  • The Company received nine -8 aircraft and retired 15 aircraft (14 -700 aircraft and one -800 aircraft) in third quarter 2024, ending the quarter with 811 aircraft
  • Third quarter 2024 capital expenditures were $517 million, driven primarily by aircraft-related capital spending, as well as technology, facilities, and operational investments

Given the Company’s ongoing discussions with Boeing and expected aircraft delivery delays, the Company continues to plan for approximately 20 -8 aircraft deliveries in 2024, which differs from its contractual order book displayed in the table below. The Company has also chosen to retire six additional aircraft in 2024, bringing total aircraft retirements for the year to approximately 41 (37 -700s and four -800s), resulting in a fleet of roughly 796 aircraft at year-end 2024.

The Company’s flight schedule is published for sale through June 4, 2025. The Company estimates fourth quarter 2024 capacity to decrease approximately 4 percent and first quarter 2025 capacity to decrease in the range of 1 percent to 3 percent, both year-over-year. The Company continues to expect annual capacity growth in 2025, 2026, and 2027 to be in the 1 percent to 2 percent range, on a year-over-year basis, funded through tactical initiatives of improving aircraft turn time and launching redeye flights. 

The Company now estimates its 2024 capital spending to be roughly $2.1 billion, which includes approximately $825 million in aircraft capital spending, assuming approximately 20 -8 aircraft deliveries in 2024. The reduction from prior guidance of approximately $2.5 billion is primarily due to changes in expectations of future aircraft delivery timing as Boeing delivery delays persist into 2025. The Company and Boeing continue to have ongoing discussions regarding the financial impacts to the Company as a result of aircraft delivery delays.

Since the previous financial results released on July 25, 2024, the Company exercised nine -7 options for delivery in 2025, one -7 option for delivery in 2026, and converted nine 2025 -7 firm orders into 2025 -8 firm orders. The following tables provide further information regarding the Company’s contractual order book and compare its contractual order book as of October 24, 2024, with its previous order book as of July 25, 2024. The contractual order book as of October 24, 2024 does not include the impact of delivery delays and is subject to change based on ongoing discussions with Boeing and subject to their production capability.

Current 737 Contractual Order Book as of October 24, 2024:

The Boeing Company
-7 Firm Orders -8 Firm Orders -7 or -8 Options Total
2024 27 58 85 (c)
2025 40 30 3 73
2026 60 26 86
2027 19 46 25 90
2028 15 50 25 90
2029 38 34 18 90
2030 45 45 90
2031 45 45 90
289 (a) 218 (b) 187 694
(a) The delivery timing for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct.
(b) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract.
(c) Includes 19 -8 deliveries received year-to-date through September 30, 2024. Given the Company’s continued discussions with Boeing and expected aircraft delivery delays, the Company continues to plan for approximately 20 -8 aircraft deliveries in 2024.

Previous 737 Order Book as of July 25, 2024 (a):

The Boeing Company
-7 Firm Orders -8 Firm Orders -7 or -8 Options Total
2024 27 58 85
2025 40 21 12 73
2026 59 27 86
2027 19 46 25 90
2028 15 50 25 90
2029 38 34 18 90
2030 45 45 90
2031 45 45 90
288 209 197 694
(a) The ‘Previous 737 Order Book’ is for reference and comparative purposes only. It should not be relied upon. See ‘Current 737 Contractual Order Book’ for the Company’s current aircraft order book.

Liquidity and Capital Deployment:

  • The Company ended third quarter 2024 with $9.4 billion in cash and cash equivalents and short-term investments, and a fully available revolving credit line of $1.0 billion
  • The Company continues to have a large base of unencumbered assets with a net book value of approximately $17.1 billion, including $14.2 billion in aircraft value and $2.9 billion in non-aircraft assets such as spare engines, ground equipment, and real estate
  • The Company had a net cash position7 of $1.4 billion, and adjusted debt to invested capital (“leverage”)8 of 46 percent as of September 30, 2024
  • The Company has returned $431 million to its Shareholders through the payment of dividends year-to-date as of September 30, 2024
  • Under the $2.5 billion share repurchase program authorized by the Company’s Board of Directors in September 2024, the Company intends to launch an initial $250 million accelerated share repurchase program soon (“fourth quarter 2024 ASR program”). Subsequent to the launch of the fourth quarter 2024 ASR program, the Company will have $2.25 billion remaining under the recently authorized $2.5 billion share repurchase program
  • The Company paid $11 million during third quarter 2024 to retire debt and finance lease obligations, including $5 million in principal related to lease return and lease buyout transactions and $6 million in scheduled lease payments

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