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Southwest Airlines Co.
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S&P 500
$22.5B
Market Cap
52.3
P/E
0.29
PEG
3.7%
ROCE
4.8%
ROE
0.75
D/E
1.7%
OPM
-23.0%
% from 52W High
72
α RS
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About

Southwest Airlines Co. operates as a passenger airline company that provides scheduled air transportation services in the United States and internationally. It also provides Rapid Rewards loyalty program; SWABIZ, an online booking tool; and inflight entertainment platform that includes movies-on-demand live and on-demand television, flight tracker, and additional curated content, as well as a variety of premium snacks and coffee. In addition, the company offers ancillary services, such as in-flight purchases, baggage fees, EarlyBird Check-In, and upgraded boarding, as well as transportation of pets and unaccompanied minors. As of December 31, 2025, the company operated a total fleet of 803 Boeing 737 aircraft; and served 117 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as ten near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. Southwest Airlines Co. was incorporated in 1967 and is headquartered in Dallas, Texas.

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Manager Shares Value % of Fund Period
Jim Simons Renaissance Technologies LLC 197.4K $7.4M 0.01% Mar 2026

SEC Form 13F data. 45-day lag from quarter end.

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Good quarter Investor Presentation One-Pager? Q2 2026
Revenue
$8.4B
+16.4% YoY
Operating Margin
3.4%
+0.3pp YoY
Net Income
$233M
n/a (GAAP; adjusted $465M)
Adjusted EPS
$0.94
+~120% YoY
What Went Right
  • Adjusted EPS of $0.94 beat initial guidance and consensus, up ~120% YoY.
  • Adjusted operating revenue hit an all-time record $8.7B, +20.3% YoY, with adjusted RASM +20.1%.
  • Managed business revenue rose 30% to a record; Rapid Rewards enrollments +35%, co-brand card acquisitions +28%.
What to Watch
  • Q2 fuel expense rose $889M YoY; full-year fuel headwind estimated at ~$1.33 per share.
  • FY26 EPS guidance reduced from 'at least $4.00' to $3.25-$4.25, driven by the forward fuel curve.
  • Q3 RASM guide includes headwind from lapping 2025 bag fees/initiatives; OTP pressure in the last 10 minutes of turns.
Management Guidance
  • Q3 RASM expected +17.5% to +19.5% YoY; capacity flat to -1%.
  • Q3 CASM-X expected +3.5% to +4.0% YoY.
  • Q3 adjusted EPS guided $0.50-$0.75.
  • Full-year 2026 adjusted EPS guided to $3.25-$4.25, replacing prior 'at least $4.00'.
Investor Lens
The investment thesis looks stronger after this quarter. Record revenue, 20.1% RASM growth, and a 3.3pp adjusted operating margin expansion despite a nearly $900M fuel headwind demonstrate the transformation is working. Management is guiding to continued double-digit RASM growth in Q3, though fuel volatility and tougher 2025 comps cap near-term visibility. The EPS beat and broad-based customer engagement gains support durable earnings power.
From investor presentation · AI-generated analysis · Not investment advice
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📈 STRONG Strong beat: EPS $0.94, +3.3pp margin despite fuel
Revenue
Record adjusted operating revenue of $8.7B, up 20.3% YoY on nearly flat capacity; GAAP operating revenue was $8.4B, up 16.4%. Managed business revenue rose 30% to a record, and adjusted RASM increased 20.1%.
Profitability
GAAP net income was $233M, or $0.47 diluted EPS; adjusted net income was $465M, or $0.94 adjusted EPS, up roughly 120% YoY. Adjusted operating margin was 6.7%.
Margins
Adjusted operating margin expanded 3.3pp YoY to 6.7%. Q2 CASM-X rose only 3.4% YoY, below the low end of guidance, while fuel averaged $3.92 per gallon.
Balance Sheet
First-half operating cash flow was nearly $2B, with Q2 operating cash flow of $0.5B, up 32% YoY. Liquidity ended at $5.3B versus a ~$4.5B target, and gross leverage improved to 2.1x.
Key Risks
Risks include elevated and volatile fuel prices, the $285M breakage revenue special item, Q3 comps against 2025 bag fees/initiatives, and operational delays in the last ten minutes of turns.
Outlook
For Q3, management expects RASM +17.5%-19.5%, CASM-X +3.5%-4.0%, and adjusted EPS of $0.50-$0.75. Full-year 2026 adjusted EPS is expected at $3.25-$4.25, based on the July 17 forward fuel curve.
Generated by AI · Q2 2026 results · Not investment advice
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✓ 📞 Earnings Call Transcripts (5 quarters) submit a missing quarter
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📞 Earnings Call Transcripts (5)
Q2 2026 Q2 2026 2026-07-23
Record Q2 results featured 120% EPS growth, record revenues, and strong customer engagement, driven by transformation initiatives and diversified revenue streams. Guidance for 2026 EPS was updated to $3.25–$4.25, with robust demand and disciplined cost control supporting margin expansion.
Q1 2026 Q1 2026 2026-04-23
First quarter saw record revenue, margin expansion, and strong demand, driven by transformation initiatives and disciplined cost management, despite higher fuel costs. Guidance for Q2 and full year remains positive but is highly sensitive to fuel prices and revenue trends.
Q4 2025 Q4 2025 2026-01-29
Record Q4 and full-year revenues, major business model transformation, and strong cost discipline drove margin expansion. 2026 guidance calls for at least $4 adjusted EPS, with further upside possible as new seat products and ancillaries ramp up.
Q3 2025 Q3 2025 2025-10-23
Record third-quarter revenue and net income exceeded expectations, driven by strong execution, cost discipline, and successful rollout of new initiatives. Guidance for record Q4 revenue and full-year EBIT of $600M–$800M reaffirmed, with continued margin expansion expected.
Q2 2025 Q2 2025 2025-07-24
Transformation initiatives are ramping up, with new products and cost controls driving expected EBIT growth in late 2025 and 2026. Despite macro headwinds and temporary booking impacts, bag fees and loyalty enhancements are outperforming, and a new $2B share buyback is underway.
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Financial Model
Projections are built from each company's audited annual financials (Income Statement, Balance Sheet, Cash Flow) over the last 5 fiscal years. Forward assumptions — revenue growth %, EBITDA margin, D&A (USD millions), interest expense, tax rate, and capex — are AI-generated using historical context and refreshed twice a year: after the December results season and after the September/Q4 results season.

DCF Valuation
Fair Value = Σ(FCFt / (1+WACC)t) + Terminal Value. Terminal Value uses the Gordon Growth Model: FCF5 × (1+g) / (WACC−g). Default WACC: 10% (US risk-free ~4.5%, equity risk premium ~5.5%). Default terminal growth: 3% (long-run US nominal GDP proxy).

CAGR Tracker
Expected 5-year CAGR = (DCF Fair Value / Current Price)1/5 − 1. Assumes fair value is reached in exactly 5 years — a mechanical estimate only.

Data Sources & Limitations
Financial statements sourced from public filings. Prices updated daily. Forward assumptions are AI-generated. All monetary values in USD millions. Non-US ADR companies may have currency conversion inaccuracies. Models are point-in-time and do not update intra-quarter or account for M&A, macro shocks, or extraordinary items.

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Investment Risk:
Investing in securities, including US equities and ETFs, involves inherent risks including the potential loss of principal. All investments are subject to market fluctuations, economic conditions, regulatory changes, and other factors that may affect their value. Past performance is not indicative of future results. This analysis is provided for informational and educational purposes only and should not be construed as investment advice under any circumstances.

No Investment Recommendation:
This analysis does not constitute, nor should it be interpreted as, an offer, solicitation, or recommendation to buy, sell, or hold any securities or financial products. Investors are strongly advised to conduct their own independent research and due diligence and to consult with a licensed financial advisor or an SEC-registered investment adviser before making any investment decisions, taking into account their individual financial situation, risk tolerance, and investment objectives.

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Information Sources:
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