Southwest logs earnings beat, stock rises after results

By Emily Bary and James Rogers

'Our quarterly performance was at the better end of our expectations and included fourth-quarter and full-year records for operating revenues and passengers,' said Southwest CEO Bob Jordan

Southwest Airlines Co. shares rose 1.3% in premarket trading Thursday after the air carrier posted an adjusted earnings beat for its latest quarter.

Southwest (LUV) reported a fourth-quarter net loss of $219 million, or 37 cents a share, about even with the loss it posted a year earlier. On an adjusted basis, Southwest earned 37 cents a share, while analysts were expecting 12 cents a share. Operating revenue for the fourth quarter was $6.8 billion, while analysts were modeling $6.75 billion.

"Our quarterly performance was at the better end of our expectations and included fourth-quarter and full-year records for operating revenues and passengers," Chief Executive Bob Jordan said in a statement.

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Fourth quarter 2023 revenue per available seat mile (RASM) decreased 8.9% compared to the prior year's quarter, beating Southwest's previous guidance range. This was due to higher-than-expected close-in bookings and continued yield strength, the company said.

Load factor fell to 78.2% from 83.5% in the same period last year, below the FactSet consensus of 81.7%. Traffic rose 13.7% to 35.58 billion revenue passenger miles and capacity increased 21.4% to 45.51 billion available seat miles.

For the first quarter, Southwest expects revenue per available seat mile to increase 2.5% to 4.5% year-over-year. This includes an approximately five-point tailwind due to the negative revenue impact incurred in first quarter 2023 associated with the December 2022 operational disruption, according to Southwest.

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The company expects capacity to increase, with first-quarter available seat miles up approximately 10% compared to the prior year's quarter. "We currently expect to grow our full year 2024 available seat miles roughly 6%, year-over-year, all of which is carryover from 2023 network restoration related growth," said Jordan, in the statement.

Fuel costs are expected to be $2.70 to $2.80 per gallon, down from $3 per gallon in the fourth quarter.

Southwest shares have risen 33% in the last three months, outpacing the S&P 500 index's SPX gain of 17.7% and the U.S. Global Jets ETF's JETS gain of 25.4%.

-Emily Bary -James Rogers

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01-25-24 0809ET

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