Southwest Airlines Q4 misses revenue but meets profit estimates

Overview

• U.S. airline's Q4 revenue slightly missed analyst expectations, while adjusted EPS met estimates

• Company achieved record Q4 operating revenue of $7.4 bln, up 7.4% yr/yr

• Company returned $2.9 bln to shareholders via dividends and share repurchases in 2025

Outlook

• Southwest Airlines expects 2026 adjusted EPS of at least $4.00

• Company forecasts 1Q 2026 RASM to rise at least 9.5% year-over-year

• Southwest anticipates earnings upside from new seating initiatives

Result Drivers

• TRANSFORMATIONAL INITIATIVES - Southwest's 2025 results were driven by strategic changes including bag fees, basic economy fares, and enhanced seating options

• COST CONTROL - The company outperformed cost reduction goals, contributing to improved margins and profitability

• OPERATIONAL EXCELLENCE - New technology and operational improvements enhanced operational reliability, supporting revenue growth

Key Details

*Applies to a deviation of less than 1%; not applicable for per-share numbers.

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 8 "strong buy" or "buy", 13 "hold" and 5 "sell" or "strong sell"

• The average consensus recommendation for the airlines peer group is "buy."

• Wall Street's median 12-month price target for Southwest Airlines Co is $43.00, about 4% above its January 27 closing price of $41.34

• The stock recently traded at 13 times the next 12-month earnings vs. a P/E of 16 three months ago

Press Release: ID:nPnQ7ly1a

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