What to expect when Southwest Airlines (LUV) reports Q2 2024 earnings results

Shares of Southwest Airlines (NYSE: LUV) were up over 2% on Tuesday. The stock has dropped 22% over the past 12 months. The airline is scheduled to report its second quarter 2024 earnings results on Thursday, July 25, before markets open. Here’s what to expect from the earnings report:

Revenue

Analysts are projecting revenue of $7.36 billion for Southwest in Q2 2024. This compares to revenue of $7 billion reported in the same period a year ago. In the first quarter of 2024, operating revenue increased around 11% year-over-year to $6.3 billion.

Earnings

The consensus estimate for Q2 2024 EPS is $0.51, which compares to adjusted EPS of $1.09 reported in the year-ago quarter. In Q1 2024, the company reported an adjusted loss of $0.36 per share.

Points to note

In an investor update provided last month, Southwest stated that its operational performance for the second quarter of 2024 was strong with minimal cancellations. The quarter-to-date completion factor, at the time, averaged approx. 99.5% despite challenging weather in Texas and Florida.

Based on its revenue performance, Southwest updated its Q2 outlook for unit revenues. It now expects unit revenues to decline 4.0-4.5% year-over-year versus its previous expectation of a decline of 1.5-3.5%. The company said this reduction was driven mainly by complexities in adapting its revenue management to booking patterns in a dynamic environment.

Southwest continues to expect capacity to be up 8-9% year-over-year in the second quarter of 2024. Operating costs, excluding fuel, or CASM-X, is expected to be up 6.5-7.5% YoY. Economic fuel costs per gallon are expected to range between $2.70-2.80.

Last week, Southwest signed a memorandum of understanding with Archer Aviation Inc. to develop operational plans for electric air taxi networks using Archer’s electric vertical take-off and landing (eVTOL) aircraft at California airports where Southwest operates. More updates on this will be worth watching.