What to expect when Southwest Airlines (LUV) reports Q1 2024 earnings results

Shares of Southwest Airlines Co. (NYSE: LUV) were up 2% on Thursday. The stock has dropped 8% over the past one year. The airline is scheduled to report its first quarter 2024 earnings results on Thursday, April 25, before markets open. Here’s what to expect from the earnings report:

Revenue

Analysts are projecting revenue of $6.4 billion for Southwest in the first quarter of 2024, which compares to revenue of $5.7 billion reported in the first quarter of 2023. In the fourth quarter of 2023, operating revenues increased 10% year-over-year to $6.8 billion.

Earnings

Analysts are predicting a loss of $0.34 per share for Southwest in Q1 2024, which compares to adjusted loss of $0.27 per share reported in the year-ago quarter. In Q4 2023, the company reported adjusted EPS of $0.37.

Points to note

In an investor update last month, Southwest said it had been seeing strong operational performance so far in Q1 2024, with lower-than-expected flight cancellations in late January. Overall, demand has remained stable and managed business trends have continued to strengthen sequentially, in line with expectations.

Southwest now expects revenue per available seat mile, or RASM, for the first quarter of 2024 to range between flat to up 2% year-over-year versus its previous estimate of up 2.5-4.5%. This is attributable to higher-than-expected completion factors in February and March, and lower-than-expected close-in leisure passenger volume. The company expects YoY RASM trends to remain positive throughout the year.

Southwest stated that it expects record first quarter operating revenues for Q1 2024, and with bookings for the second quarter of 2024 staying ahead of seasonally normal trends, the company expects to deliver all-time record operating revenues for Q2. However, the Dallas-based airline expects a net loss in Q1.  

LUV now expects capacity for Q1 2024 to increase approx. 11% YoY versus its earlier estimate of around 10%. Since February, its completion factor has averaged 99.3%.

Southwest expects operating expenses per available seat mile, excluding fuel and oil expense, profit-sharing, and special items, or CASM-X, to increase approx. 6% YoY in Q1 versus its previous estimate of an increase of 5-6%. Economic fuel costs per gallon are now expected to be $2.95-3.00 versus the previous range of $2.70-2.80.

With regards to aircraft deliveries, Southwest now expects 46 Boeing 737-8 aircraft deliveries in 2024. It also assumes there will be no 737-7 aircraft deliveries this year. The company said that due to Boeing’s continued challenges, it expects the delivery schedule to be fluid and therefore plans to reduce capacity and re-optimize schedules, especially for the back half of 2024. As a result, it plans to update its entire FY2024 guidance, which it will provide in its Q1 report.