Recovering from Crisis: Southwest Airlines Reports $465 Million Profit in 2024 and Plans Fleet Reduction in 2025
Southwest added 22 Boeing 737-8 aircraft in 2024 and expects to receive 38 more in 2025. Meanwhile, the airline plans to retire 51 aircraft, including 49 Boeing 737-700s and two Boeing 737-800s.
Southwest Airlines released its fourth-quarter and full-year 2024 financial results, reporting a net income of $261 million in Q4 and $465 million for the full year. The diluted earnings per share (EPS) stood at $0.42 for Q4 and $0.76 for the year.
Excluding special items, adjusted net income reached $356 million in Q4 and $597 million for the year, equivalent to $0.56 and $0.96 per diluted share, respectively.
The airline reported record operating revenues of $6.9 billion in Q4 and $27.5 billion for the full year. Meanwhile, liquidity stood at $9.7 billion, surpassing its outstanding debt of $6.7 billion.
In terms of shareholder returns, Southwest distributed $680 million through dividends and share buybacks in 2024 and announced an accelerated $750 million repurchase program as part of its $2.5 billion buyback authorization.
CEO Outlook and 2025 Strategy
Southwest Airlines CEO Bob Jordan highlighted a strong year-end performance, driven by strategic initiatives and operational improvements.
"Although challenges remain, our revenue strategies are yielding results faster than expected. Additionally, we continue optimizing costs toward our $500 million reduction goal by 2027," said Jordan.
Looking ahead, 2025 is set to be a key year for Southwest’s strategic plan, "Southwest. Even Better.". The airline announced an amended agreement with Chase, enhancing credit card benefits and supporting long-term financial goals.
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Operationally, Southwest projects a 2% to 3% decrease in available seat miles (ASM) for Q1 2025, followed by a 1% to 2% increase for the full year. The company also anticipates fuel efficiency improvements and cost optimization.
Q4 Performance and Fleet Strategy
- Revenue Growth: 1.6% year-over-year, reaching $6.9 billion in Q4.
- Expense Reduction: 7.9% decrease in operating expenses, including a 1.9% improvement in fuel efficiency.
- Fleet Expansion: Southwest added 22 Boeing 737-8 aircraft in 2024 and plans to receive 38 new aircraft in 2025.
- Retirements: The airline will phase out 51 aircraft (including 49 Boeing 737-700s and two 737-800s), optimizing its fleet for fuel efficiency and operational effectiveness.
As of 2024, Southwest operates 803 aircraft and expects to end 2025 with approximately 790 aircraft. This controlled fleet growth aligns with Boeing’s delivery schedule and the airline’s operational needs.
Capital Investments and Financial Outlook
- 2024 Capital Expenditure: $2.1 billion
- 2025 Planned Investments: $2.5 to $3.0 billion, with:
- $1.2 billion allocated to new aircraft acquisitions
- $1.6 billion dedicated to infrastructure and operational enhancements
Southwest aims to improve operating margins and return on invested capital (ROIC) by 2027, targeting at least 10% and 15%, respectively.
The company reaffirmed its commitment to cost efficiency, route optimization, and passenger experience enhancement to boost profitability in the coming years.
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