Southwest Airlines (LUV) Q2 2025 Earnings Call July 24, 2025 12:30 PM ET Company ParticipantsLauren Yett - Investor RelationsRobert Jordan - President, CEO & VC of Board of DirectorsAndrew Watterson - COOTom Doxey - Executive VP & CFOCatherine O'Brien - Vice PresidentHillary Cacanando - Director - Equity ResearchSavanthi Syth - Managing DirectorWhitney Eichinger - Senior VP & Chief Communications OfficerAlison Sider - ReporterRobert Silk - Senior EditorConference Call ParticipantsJamie Baker - Senior Analys ...

Southwest Airlines (LUV) Q2 2025 Earnings Call July 24, 2025 12:30 PM ET Speaker0Hello, everyone, and welcome to the Southwest Airlines Second Quarter twenty twenty five Conference Call. I'm Gary, and I'll be moderating today's call, which is being recorded. A replay will be available on southwest.com in the Investor Relations section. After today's remarks, there is an opportunity to ask questions. Now, Lauren Yett from Investor Relations will begin the discussion.Please go ahead, Lauren.Speaker1Thank you. ...

Core Insights - Southwest Airlines reported its second quarter 2025 financial results, highlighting progress in its transformational plan, including the implementation of bag fees and a basic economy product, which exceeded revenue expectations [1][6][8] - The company achieved approximately one-third of its $1.8 billion EBIT target for 2025 in the first half of the year and remains confident in meeting the remaining target in the second half [1][11] - A new $2.0 billion share repurchase program has been authorized by the Board of Directors, expected to be completed over two years, reflecting strong management execution and belief in the company's transformational plan [1][19] Financial Performance - Second quarter 2025 net income was $213 million, or $0.39 per diluted share, a decrease of 42% year-over-year [7][29] - Total operating revenues for the second quarter were $7.2 billion, down 1.5% year-over-year, with passenger revenues at $6.6 billion, a 1.3% decrease [8][29] - Operating expenses increased by 0.9% year-over-year to $7.0 billion, with CASM-X rising 4.7% [20][29] Revenue and Outlook - Domestic leisure travel stabilized in Q2 2025, with the company outperforming industry peers in domestic unit revenue [6][10] - The company expects third quarter 2025 unit revenues to range from down 2% to up 2% year-over-year, with flat capacity [10][11] - Full year 2025 EBIT guidance is set between $600 million and $800 million, driven by company-specific initiatives and improving domestic leisure travel trends [11][19] Key Initiatives - The introduction of bag fees and a basic economy product has laid the groundwork for future product differentiation, with initial financial benefits exceeding expectations [1][8] - The company has reintroduced flight credit expiration and announced partnerships with China Airlines and Icelandair [8][19] - More than 220 aircraft have been retrofitted for extra legroom seating, with assigned and premium seating sales starting on July 29, 2025, for travel beginning January 27, 2026 [8][19] Capacity and Fleet Management - The company anticipates a modest capacity increase of approximately 1% for the full year 2025, driven by improved aircraft utilization [15][16] - Fleet planning has been updated to include 47 Boeing 737-8 aircraft deliveries in 2025, with approximately 55 aircraft expected to be retired [16][17] Liquidity and Capital Deployment - The company ended Q2 2025 with $3.8 billion in cash and cash equivalents, alongside a fully available revolving credit line of $1.0 billion [22][19] - A total of $1.6 billion was returned to shareholders in Q2 2025 through dividends and share repurchases [22][19]

Summary of Southwest Airlines' Q1 2025 Earnings Call Company Overview - **Company**: Southwest Airlines - **Quarter**: First Quarter 2025 Key Points Financial Performance - **Operating Revenue**: Achieved a record of $6.4 billion in Q1 2025, with RASM (Revenue per Available Seat Mile) increasing by 3.5% on record yields [2][9] - **Cost Performance**: CASMX (Cost per Available Seat Mile excluding fuel) improved to 4.6%, better than the adjusted guidance of approximately 6% [7] - **EBIT Targets**: Reaffirmed targets of $1.8 billion for 2025 and $4.3 billion for 2026 from ongoing initiatives despite not reiterating full-year EBIT guidance due to macroeconomic uncertainties [3][9] Strategic Initiatives - **Revenue Strategy Transformation**: Announced plans to enhance revenue strategy, including dynamic reward pricing and the introduction of a basic economy product [2][3] - **Cost Reduction Plan**: Focused on cost discipline, with ongoing efforts to reduce unit costs and capacity adjustments to capture savings [3][4] - **Loyalty Program Optimization**: Enhanced the rapid rewards program and expanded distribution through partnerships with online travel agencies like Expedia, which has exceeded expectations [2][5] Capacity and Scheduling - **Capacity Growth**: Planned ASM (Available Seat Mile) growth of 1-2% for 2025, with adjustments to reduce capacity in the second half of the year due to demand uncertainties [3][4] - **Turn Time Initiative**: Successfully reduced turn time by five minutes in 19 stations, contributing to improved operational efficiency [2][5] Market Conditions and Demand - **Booking Trends**: Noted softer booking trends continuing into Q2 2025, with a cautious outlook on forecasting due to macroeconomic uncertainties [3][10] - **Load Factor**: Experienced a decline in load factor, with a focus on maintaining pricing discipline amid demand fluctuations [14][15] Customer Engagement and Feedback - **Customer Surveys**: Ongoing surveys indicate evolving customer sentiment regarding new initiatives, with engaged customers showing positive responses to changes [10][12] - **Loyalty Program Growth**: Record spending on co-branded credit cards, indicating strong customer engagement and loyalty [5][12] Future Outlook - **Incremental Revenue Initiatives**: Expected ramp-up in revenues from new initiatives like bag fees and flight credit expiration, with significant contributions anticipated in Q3 and Q4 2025 [6][9] - **Investment in Fleet**: Plans to retrofit aircraft for improved efficiency and customer experience, with a focus on maximizing revenue per square foot [26][27] Challenges and Risks - **Macroeconomic Uncertainty**: Acknowledged challenges in forecasting due to the current economic environment, impacting both demand and pricing strategies [3][10] - **Competitive Landscape**: Emphasized the need to differentiate from competitors while maintaining a strong value proposition for customers [28][29] Additional Insights - **Debt Management**: Plans to pay down $2.6 billion of debt in Q2 2025, including significant prepayments, reflecting a commitment to maintaining a strong balance sheet [8][11] - **Share Repurchase Program**: Completed $1 billion of a $2.5 billion share repurchase authorization, indicating confidence in future performance [8][11] This summary encapsulates the key points discussed during the earnings call, highlighting Southwest Airlines' financial performance, strategic initiatives, market conditions, and future outlook.

Southwest Airlines (LUV) Q1 2025 Earnings Call April 24, 2025 09:29 PM ET Company Participants Julia Landrum - Vice President, Investor RelationsRobert Jordan - President, CEO & Vice Chairman of the BoardAndrew Watterson - COOTom Doxey - Executive VP & CFORavi Shanker - Managing DirectorSheila Kahyaoglu - Managing DirectorDuane Pfennigwerth - Senior Managing DirectorSavanthi Syth - MD - Airlines & Advance Air MobilityWhitney Eichinger - Senior VP & Chief Communications OfficerAlison Sider - ReporterMary Sch ...

Southwest Airlines Co. (NYSE:LUV) Q1 2025 Earnings Conference Call April 24, 2025 12:30 PM ET Corporate Participants Julia Landrum - Vice President, Investor Relations Bob Jordan - President & Chief Executive Officer Andrew Watterson - Chief Operating Officer Tom Doxey - Executive Vice President & Chief Financial Officer Whitney Eichinger - Chief Communications Officer Conference Call Participants Ravi Shankar - Morgan Stanley Andrew Didora - Bank of America Catherine O'Brien - Goldman Sachs David Vernon - ...