Southwest Airlines Q4 Earnings Surpass Estimates, Rise Y/Y

Core Viewpoint - Southwest Airlines Co. reported a strong fourth-quarter performance with earnings per share of 56 cents, exceeding estimates and showing a significant year-over-year improvement of 51.5% [1] Financial Performance - Revenues for the quarter were $6.93 billion, slightly missing the consensus estimate of$6.95 billion, but reflecting a year-over-year increase of 1.6% due to effective tactical actions and strong demand [2] - Operating income was reported at $278 million, a turnaround from an operating loss of$404 million in the same quarter last year, with adjusted operating income at $397 million compared to$182 million previously [5] - Total adjusted operating expenses increased by 6.3% year over year [5] Operating Statistics - Revenue passenger miles decreased by 3.1% year over year to 34.47 billion, while available seat miles fell by 4.4% to 43.53 billion, leading to a load factor increase of 1 percentage point to 79.2% [3] - Passenger revenue per available seat mile (PRASM) grew by 6.2% year over year to 14.49 cents, and revenue per available seat mile (RASM) also increased by 6.2% to 15.92 cents [3][4] Cost and Liquidity - Fuel costs per gallon decreased by 19.3% year over year to $2.42, while consolidated unit cost (CASM) excluding fuel and special items rose by 11.1$7.50 billion, down from $8.50 billion in the previous quarter, and long-term debt remained stable at$5.06 billion [7] Shareholder Returns and Future Outlook - Southwest Airlines returned $680 million to shareholders through dividends and share repurchases in 2024 and announced a$750 million accelerated share repurchase program [8] - For Q1 2025, ASMs are expected to decline by 2%-3%, with economic fuel costs projected between $2.50 and$2.60 per gallon, and RASM anticipated to increase by 5-7% [8] - The company aims for an operating margin of more than 10% by 2027 and expects ROIC to increase by more than 15% [10]