# Southwest Airlines Co. (LUV) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-13  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/LUV/thesis · /stocks/LUV/memo

## Financial Snapshot

---
ticker: LUV
step: 04
generated: 2026-05-12
source: quick-research
---

### Southwest Airlines Co. (LUV) — Financial Snapshot

#### Income Statement Summary

| Metric | FY2022 | FY2023 | FY2024 | YoY |
|--------|--------|--------|--------|-----|
| Revenue | ~$23.8B | ~$26.1B | $27.5B | +5.4% |
| Gross Margin | ~20% | ~20% | ~18% | -200bp |
| Operating Margin | ~4% | ~3% | ~1% | -200bp |
| Net Income | ~$0.98B | ~$0.47B | ~$0.47B | flat |
| EPS (diluted, GAAP) | ~$1.60 | ~$0.77 | ~$0.77 | flat |

*Note: FY2024 profitability compressed by elevated labor costs (new union contracts) and fuel. Q1 2025 EPS was -$0.13 (loss) as transformation costs weighed. FY2026 full-year guidance: ≥$4.00 adjusted EPS — a major step-change driven by bag fees + assigned seating revenue.*

#### Cash Flow & Balance Sheet (FY2024)

| Metric | Value |
|--------|-------|
| Operating Cash Flow | ~$2.5B |
| Free Cash Flow | ~$0.8B |
| Cash & Investments | ~$9.5B |
| Total Debt | ~$8.0B |
| Net Cash Position | ~$1.5B |

#### Key Ratios (approximate)
- P/E (2026E): ~10x on $4.00 EPS guidance | EV/EBITDA: ~8x
- Revenue Growth (FY2024): +5.4% | Operating Margin: ~1% (recovering to target ~8–10% by 2027)
- Q1 2026 EPS: $0.45 (vs. -$0.13 a year prior) — transformation inflecting positively

#### Growth Profile
Southwest's revenue has grown from $23.8B (2022, recovery year) to $27.5B (2024) but profitability has been severely compressed by the 2023–2024 labor contract renegotiations, which baked in significant wage increases across all work groups. The 2025–2026 transformation (bag fees: May 2025; assigned seats: January 2026) is designed to add $2B+ in incremental annual revenue with minimal incremental cost, restoring margins to historical levels. Q1 2026 marked the first clear inflection: $780M (+13.4%) passenger revenue growth YoY, primarily from ancillary transformation.

#### Forward Estimates
- FY2026 adjusted EPS guidance: ≥$4.00 (JPMorgan target $60/share; ~15x P/E)
- $4.3B cumulative incremental EBIT target through 2027 from transformation
- $5.0B ancillary revenue target by 2026 (bag fees + premium seating + loyalty)
- Boeing MAX 7 certification expected August 2026 — fleet renewal to resume

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/LUV/fundamental

## Navigation

- Overview: /stocks/LUV
- Financials (this page): /stocks/LUV/financials
- Thesis: /stocks/LUV/thesis
- Investment Memo: /stocks/LUV/memo
- Coverage universe: /stocks