On July 25, 2024, Southwest Airlines Co (LUV, Financial) released its 8-K filing detailing its second quarter 2024 financial results. Southwest Airlines, the largest domestic air carrier in the United States by passengers boarded, operates over 800 aircraft in an all-Boeing 737 fleet. The airline specializes in short-haul, leisure flights with a single, open-seating cabin configuration in a point-to-point network.
Performance Overview
Southwest Airlines Co (LUV, Financial) reported a net income of $367 million, or $0.58 per diluted share, surpassing the analyst estimate of $0.53 per share. The company also achieved record quarterly operating revenues of $7.4 billion, exceeding the estimated revenue of $7,322.19 million. Despite these achievements, the company faced several challenges that impacted its performance.
Financial Achievements and Challenges
Southwest Airlines Co (LUV, Financial) reported a liquidity position of $11.0 billion, well above its outstanding debt of $8.0 billion. This strong liquidity is crucial for maintaining operational stability and funding future growth initiatives. However, the company experienced a 3.8% year-over-year decline in Revenue per Available Seat Mile (RASM), primarily due to industry-wide domestic capacity growth outpacing demand and revenue management challenges.
Bob Jordan, President, CEO, & Vice Chairman of the Board of Directors, stated, "Our second quarter performance was impacted by both external and internal factors and fell short of what we believe we are capable of delivering. We are taking urgent and deliberate steps to mitigate near-term revenue challenges and implement longer-term transformational initiatives that are designed to drive meaningful top and bottom-line growth."
Income Statement Highlights
Southwest Airlines Co (LUV, Financial) reported the following key metrics for Q2 2024:
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Income | $367 million | $370 million |
| Earnings per Share | $0.58 | $0.58 |
| Operating Revenues | $7.4 billion | $7.1 billion |
Balance Sheet and Cash Flow
Southwest Airlines Co (LUV, Financial) ended Q2 2024 with $10.0 billion in cash and cash equivalents and short-term investments. The company also maintained a fully available revolving credit line of $1.0 billion. The net cash position stood at $2.0 billion, and the adjusted debt to invested capital ratio was 46% as of June 30, 2024.
Operational Metrics
Southwest Airlines Co (LUV, Financial) reported a 4.5% year-over-year increase in operating revenues, driven by record passenger numbers and ancillary revenue. However, the company faced a 6.0% year-over-year increase in Cost per Available Seat Mile excluding fuel and oil expense (CASM-X), primarily due to market-driven rate inflation in salaries, wages, and benefits, and higher maintenance expenses.
Future Outlook
Looking ahead, Southwest Airlines Co (LUV, Financial) expects third-quarter 2024 unit revenue to be flat to down 2% year-over-year, with capacity up approximately 2%. The company is also implementing several initiatives to improve revenue management and operational efficiency, including the introduction of assigned and premium seating.
For more detailed insights, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Southwest Airlines Co for further details.
