Southwest Airlines’ fourth-quarter profit exceeded analyst estimates, driven by robust travel demand and increased airfares. The airline’s adjusted profit of 56 cents per share surpassed the average estimate of 44 cents.
The carrier’s operating revenue rose 1.6% to $6.93 billion in the quarter, supported by improved pricing power. Airlines across the US have reduced seating capacity to boost fares after a surge in demand last summer led to discounts and margin sacrifices.
Airfares in December saw their fastest growth in 21 months, contributing to Southwest’s strong Q4 results. The company expects its unit revenue to grow 5-7% in the first quarter, outpacing analysts’ expectations of a 2.62% increase.
However, Southwest faces challenges due to expensive labor contracts and aircraft maintenance expenses. Despite this, the airline remains confident in its plans to enhance revenue and liquidity through initiatives such as vacation packages and aircraft sale-leasebacks.
CEO Bob Jordan stated that while there is still work to be done, the airline’s progress has been supported by a constructive demand environment and industry backdrop. The company expects to receive 38 Boeing 737 MAX 8 aircraft in 2025, which will help alleviate supply chain pressures.
Source: https://www.cnbc.com/2025/01/30/southwest-airlines-luv-q4-earnings.html