Financial Data and Key Metrics Changes - The third quarter saw record revenue performance, with both costs and revenue finishing significantly ahead of expectations [4][6][20] - CASM-X increased by 2.5%, beating the midpoint of guidance by two points, indicating strong cost performance [16][20] - The company expects to achieve a full-year EBIT guidance range of $600 million to $800 million [7][20] Business Line Data and Key Metrics Changes - The rollout of assigned and extra legroom seating began in July, leading to a 4% improvement in customer net promoter score on aircraft with the new configuration [4][6] - Loyalty revenue increased by 7% in the third quarter, with double-digit growth in co-brand card acquisitions year-over-year [12][13] - The company anticipates over $1 billion of incremental EBIT from assigned and extra legroom seating in 2026, reaching a full run rate of approximately $1.5 billion in 2027 [8][15] Market Data and Key Metrics Changes - Corporate travel demand improved sequentially, particularly in September, with multi-point passenger growth observed [12][56] - The demand environment showed a positive inflection beginning in early July, which continued throughout the quarter [6][11] - The company plans for fourth-quarter capacity growth of approximately 6% year-over-year, with a modest year-over-year increase expected in Q1 [14][49] Company Strategy and Development Direction - The company is focused on transforming its product offerings and enhancing customer experience, including the introduction of free Wi-Fi for Rapid Rewards members [5][21] - Strategic initiatives are on track, with a commitment to expanding product offerings and enhancing the Rapid Rewards loyalty program [6][21] - The company is exploring additional premium revenue opportunities, including premium seating and airport lounges [6][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fourth quarter and full-year guidance, citing strong operational performance and cost discipline [7][20] - The company is optimistic about the opportunities ahead, expecting to recognize greater benefits from its initiatives in 2026 [8][21] - Management acknowledged challenges such as summer weather and ATC constraints but emphasized operational excellence [7][8] Other Important Information - The company finished the quarter with $3 billion in cash, aligning with its liquidity target of $4.5 billion [19] - An accelerated share repurchase program of $250 million was executed under a previously announced $2 billion authorization [19] - The company is actively looking at changes to widen its product offerings and enhance customer experience [6][21] Q&A Session Summary Question: Sequential improvement into the fourth quarter - Management noted that the added capacity allows for extra revenue during peak demand periods, while not assuming further macroeconomic inflection due to uncertainties like the government shutdown [26][27] Question: Corporate growth and sales numbers - Corporate sales for future travel increased by 5% year-over-year in Q3, with expectations that assigned seating will unlock additional growth [56] Question: Unit revenue trends and initiatives - Management indicated that the initiatives are on track, with a focus on improving load factors and revenue management strategies [37][39] Question: Shareholder returns and leverage targets - The company aims to maintain headroom within its leverage target while ensuring strong returns to shareholders [75][76] Question: EBIT contribution from initiatives - Management reiterated that the largest contributions to EBIT will come from bag fees and the new seating initiatives, with a focus on maintaining cost discipline [79][80]

Financial Data and Key Metrics Changes - The third quarter of 2025 saw record revenue performance, with both costs and revenue finishing significantly ahead of expectations [4][6][20] - The company expects to deliver an all-time quarterly record revenue performance in the fourth quarter [7] - Full-year EBIT guidance remains at $600 to $800 million, with confidence in achieving this target [20][21] Business Line Data and Key Metrics Changes - Loyalty revenue increased by 7% in the third quarter, with double-digit growth in co-brand card acquisitions year over year [12] - The rollout of assigned and extra legroom seating began in July, leading to a 4% improvement in customer net promoter score on aircraft with this new configuration [4][6] - The company anticipates over $1 billion of incremental EBIT from assigned and extra legroom seating in 2026, reaching a full run rate of approximately $1.5 billion in 2027 [9][15] Market Data and Key Metrics Changes - Corporate travel demand improved sequentially, particularly in September, with multi-point passenger growth observed [12] - The demand environment showed a positive inflection beginning in early July, which continued throughout the quarter [6][12] Company Strategy and Development Direction - The company is actively looking to widen its product offerings, including premium revenue opportunities and enhancements to the Rapid Rewards loyalty program [6] - New markets are being launched, including Knoxville, Tennessee, and Anchorage, Alaska, with services starting in 2026 [5] - The strategic plan is progressing well, with sustained outperformance in bag fee revenue and momentum across other key revenue and cost initiatives [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fourth quarter and full-year guidance, highlighting strong operational performance and cost discipline [7][20] - The company is not providing 2026 guidance yet but is excited about future opportunities and the benefits from ongoing initiatives [9][21] - Management noted that the operational rollout of new initiatives has been smooth, with encouraging early results [21] Other Important Information - The company finished the quarter with $3 billion in cash, aligning with its liquidity target of $4.5 billion [19] - An accelerated share repurchase program of $250 million was executed under a previously announced $2 billion authorization [19] Q&A Session Summary Question: Sequential improvement into the fourth quarter - Management noted that the added capacity allows for capturing extra revenue during peak demand periods, with a solid inflection in demand maintained since July [27][28] Question: Stats on initiatives and load factor improvements - Load factor increased year over year in August, September, and October, driven by enhanced connectivity and the rollout of new fare products [37] Question: Corporate growth and sales numbers - Corporate sales for future travel, excluding government, improved by 5% year over year in Q3, with expectations for further growth with assigned seating [52] Question: Shareholder returns and leverage targets - The company aims to maintain headroom within its leverage target while ensuring strong investment-grade status [66][68] Question: EBIT contribution from initiatives - The largest contribution to EBIT is expected from bag fees, with additional contributions from new initiatives ramping up in 2026 [70][72]

Accessibility StatementSkip Navigation DALLAS, Oct. 22, 2025 /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) (the "Company") today reported its third quarter 2025 financial results, with unit revenues, unit costs, and net income all exceeding its expectations and strong execution continuing across the business. Company Highlights: Bob Jordan, President, Chief Executive Officer, & Vice Chairman of the Board of Directors, stated, "We continue to make substantial progress as we execute the most significant ...