Categories Earnings, U.S. Markets News

Earnings preview: Southwest Airlines will face few headwinds in Q4

Southwest Airlines (LUV) is set to report its fourth-quarter earnings on Thursday before the bell. Investors were concerned about the increasing fuel costs, the US government shutdown and bad weather for the reduction in domestic travel. But, this headwinds could hurt the company’s results in the next quarter. Passenger revenues have been the major catalyst in air travel demand.

The airlines’ industry has been undergoing an uncertainty period where the pressure from various headwinds has stood as a hindrance in its profitability. After facing with rising fuel costs in 2018, the headwinds have started to rise with the US government shutdown and bad weather prompting to a reduction in domestic travel.

Investors have shared their concerns that the industry will face political uncertainty and fuel costs as a major hindrance to profitability in the next quarter. However, traders believe that on the back of a thriving economy, the air travel demand could increase and remained the major catalyst for driving passenger revenues.

The oil prices have fallen nearly 40% in the fourth quarter and this could enhance the bottom line as operating expenses are likely to be lesser. However, on a year-over-year basis, the fuel price estimate for the fourth quarter remained at a pretty high level. Investors will keenly await for reports from Southwest Airlines as it is America’s largest low-cost carrier.

Related: Southwest Airlines Q3 2018 Earnings Transcript

Analysts expect Southwest Airlines to post earnings of $1.07 per share on revenue of $5.67 billion for the fourth quarter. In comparison, during the previous year quarter, the company reported a profit of $0.77 per share on revenue of $5.27 billion. Majority of the analysts recommended a “strong buy” or “buy” rating while expecting the stock to reach $60.78 in the next 52 weeks.

The results for the fourth quarter will be benefited by higher revenues as well as a decline in the federal income taxes. The outlook was lowered citing to a lower than expected improvement in the domestic market. It is expected that a strong travel demand would boost the carrier’s passenger revenues.

Shares of Southwest opened higher on Wednesday and is trading in the green territory. The stock has fallen over 22% in the past year and over 11% in the past three months.


Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text.

Most Popular

IPO Alert: Here’s what to look for when CaliberCos goes public

The massive slowdown in the IPO market continued in the second half as the challenges posed by high inflation and interest rate hikes weighed on investor confidence. Meanwhile, there is

CarMax (KMX) Stock: Does the current dip offer a buying opportunity?

The automotive sector is one of the worst affected by the combination of high inflation and rising interest rates. Consumers have become more cautious and are prioritizing their purchases with

Ultimax Digital gears up for $10mln IPO. Here’s all you need to know

The IPO market has witnessed muted activity this year, and things don’t seem to have improved in the second half. The upcoming public listing of video game technology firm Ultimax

Add Comment
Viewing Highlight