Southwest Airlines’
results have indicated that its revenue initiatives and performance are working, according to the carrier’s chief executive, allowing the company to end 2024 with record-breaking revenues.
Positive momentum
Bob Jordan, the president and chief executive officer (CEO) of Southwest Airlines, said that the airline closed 2024 with positive momentum from its revenue initiatives and operational performance.
The airline ended Q4 2024 and full-year with net income of $261 million and $465 million, respectively. Its revenues were $6.9 billion in Q4 2024 and $27.5 billion in 2024, with liquidity of $9.7 billion being well in excess of its debt of $6.7 billion.
Photo: Jon Tetzlaff | Shutterstock
However, Jordan was cautious that the company still had much work to do yet still recognized that improvements from its tactical initiatives were materializing faster than it had expected. Its progress continues to be supported by a “constructive demand environment and industry backdrop.”
“Based on confidence in our performance and outlook, we are launching a $750 million accelerated share repurchase, with the initial $250 million share repurchase now complete. We are also pleased with our continued strong operational performance.”
Southwest Airlines Raises Q4 Estimate On Better Than Expected Leisure Demand
Southwest Airlines is hopeful that the positive momentum will carry over into 2025.
Better than expected Boeing deliveries
Southwest Airlines also outlined that in 2024, 
Boeing
delivered 22 737 MAX 8 aircraft, or two more than it had expected, with its full-year capacity growing 4.1% year-on-year (YoY). It ended 2024 with 803 aircraft, reflecting 36 aircraft retirements – 34 737-700
, two 737-800 – four fewer than previously expected as it shifted two 737-700 and two 737-800
retirements into 2025.
Currently, the airline is assuming that it will welcome 38 737 MAX 8s
in 2025, which is much lower than its contractual order book. In 2025, Boeing is contractually obliged to deliver 136 737 MAX 7 and 737 MAX 8 aircraft, which includes 27 737 MAX 7
and 36 737 MAX 8 that were scheduled to be delivered in 2024.
“This planning assumption supports the Company’s plans to retire approximately 51 aircraft, including 49 -700s and two -800s, ending 2025 with roughly 790 aircraft in its fleet.”
Photo: VDB Photos | Shutterstock
Southwest Airlines noted that it was optimistic that the manufacturer could deliver more than 38 aircraft in 2025 following discussions with Boeing. Any additional aircraft will be used to support its fleet modernization and capital allocation strategies.
Boeing still has not certified the 737 MAX 7, with the company planning to do so in 2025. During the plane maker’s Q4 2024 earnings call on January 28, Boeing’s executives outlined that it will focus its efforts to certify the 737 MAX 7 and 737 MAX 10, which Southwest Airlines has not ordered, in 2025.
Notably, Southwest Airlines exercised an additional 11 737 MAX 7 options for deliveries in 2025 and 2026, resulting in a firm order book of 496, split between 300 737 MAX 7 and 196 737 MAX 8 aircraft.
Related
Boeing Focused On 737-7, 737-10 & 777X Certification & Increasing 737 Production
During Boeing’s Q4 2024 earnings call, the company spoke about its key commercial aircraft programs.
Pivotal year
Jordan added that 2025 will be a pivotal year for the airline as it continues to execute its ‘Southwest. Even Better.’ transformation plan that it unveiled amidst a proxy battle with Elliott Investment Management (Elliott) in September.
“To that end, we recently reached an amended co-brand agreement with Chase that provides enhanced Cardmember benefits associated with our assigned and premium seating initiative and supports the multi-year financial targets we announced at Investor Day.”
The CEO concluded that the airline will continue moving forward to drive financial improvements while maintaining a safe, reliable, and efficient operation, promising to deliver unrivaled hospitality to its customers and enhanced returns to shareholders.
Photo: Markus Mainka | Shutterstock
Southwest Airlines expects revenue per available seat mile (RASM) to grow between 5% and 7%, with capacity presumably going down 2% to 3% YoY in Q1. The only guidance for 2025 was that its operating margins, excluding special items, should be between 3% and 5% (2027 target: 10% or more), while return on invested capital (ROIC) should be from 5% to 8% (2027 target: 15% or more).
Capacity, measured in available seat miles (ASM), should grow in limited numbers in 2025, ranging from 1% to 2%, which is the same goal that the airline set out to achieve by 2027.
Related
Southwest Airlines Cuts Back On Hiring Under Pressure From Elliott Investment
Southwest Airlines previously said that due to Boeing delivery delays, it has been overstaffed and that it would not grow its workforce through 2026.
