西南航空公司報告2024年第三季度業績
得克薩斯州達拉斯-2024年10月24日-西南航空公司（紐交所：LUV）（「公司」）今天公佈了其2024年第三季度財務業績：
•淨利潤爲 6,700萬美元，每股稀釋收益爲0.11美元
•淨利潤，不含特殊項目1主要由於之後資金缺口不明確及公司市值的下降而產生。 8900萬美元，每股攤薄收益0.15美元
•第三季度營業收入記錄 69億美元
•流動性216.6%$104億，遠遠超過未償債務。 $80億
•公司宣佈了一個2.5 億美元加速股票回購計劃，該計劃是公司25 億美元股票回購授權計劃的一部分
鮑勃·喬丹，總裁，首席執行官，以及董事會副主席表示：「我們正處於一個令人興奮的時刻，因爲我們正在執行上個月在投資者日上概述的『西南航空。更好。』計劃。這一變革性計劃代表了我們團隊的奉獻和辛勤工作的結晶。我們正全力以赴地實施計劃中包含的一系列務實和戰略舉措，並期待回歸我們預期的強勁財務表現。我們完全致力於執行我們的計劃，並定期報告我們的進展。我們第三季度的利潤和強勁的運營業績反映了我們正在採取的行動，以實施我們的計劃並實現2027年至少15%甚至更高的ROIC的目標。」3 ，基於我們當前的進展、展望以及對我們能夠執行我們的計劃的信心，我們打算通過加速股份回購計劃回購首批2.5億美元的西南航空普通股，這是上個月宣佈的25億美元股份回購授權的一部分。” ，基於我們對能夠執行我們的計劃的當前進展、展望以及信懇智能，我們打算通過加速股份回購計劃回購首批2.5億美元的西南航空普通股，這是上個月宣佈的25億美元股份回購授權的一部分。”
指導和展望：
以下表格爲2024年第四季度提供了部分財務指導：
| 2024年第四季度預估 | ||||||||
| RASm（a），同比增長 | 增長3.5%至5.5% | |||||||
| ASMs（b），同比增長 | $0.08 | |||||||
(b)1,4 | — | |||||||
| 燃料套期保值保費每加侖 | $0.07 | |||||||
| 燃料套期保值現金結算收益每加侖 | $0.01 | |||||||
| 每加侖可用座位數（燃油效率） | 81到82 | |||||||
CASm-X（年同比增長）1,5 | 增加11%至13% | |||||||
| 計劃償還債務（百萬美元） | ~$5 | |||||||
| 利息費用（百萬美元） | ~$62 | |||||||
| Aircraft (d) | 796 | |||||||
(a)每可用座位英里的營業收入（"RASM"或"單位收入"）。
(b) 可用座位英里（"ASMs"或"容量"）。 公司的航班時間表已發佈至2025年6月4日。 公司預計2025年第一季度的容量將同比下降1%至3%。
(c)每個可用座位英里的營業費用，不包括燃油和機油費用、特殊項目和利潤分享（"CASm-X"）。
(d) 財產上的飛機，期末。公司仍在計劃大約20架波音737-8("-8")飛機的交付，並預計2024年將有41架飛機退役，包括37架波音737-700("-700")和四架波音737-800("-800")。波音737-7("-7")的交付計劃取決於美國聯邦航空管理局("FAA")向波音公司("波音")和公司頒發所需的認證和批准。FAA最終將確定-7認證和投入運營的時間，波音可能繼續面臨製造挑戰，因此公司無法保證當前的估計和時間表能夠實現。
營業收入結果和展望:
•2024年第三季度營業收入達到了69億美元的季度記錄，同比增長5.3％
•2024年第三季度旅客收入創下63億美元的記錄，同比增長5.7%
•2024年第三季度RASm同比增長了2.8%，位於公司先前的指導區間內
公司在第三季度的業績表現創下記錄，主要得益於整個行業板塊容量控制的產出提升，以及在推動結果方面管理戰術舉措的取得進展。公司2024年第三季度的RASm同比增長了2.8%，實現了堅實的環比提升，並且位於其最近改進的指引範圍內，同比增長爲2%至3%。
公司預計2024年第四季度單位收入將在同比基礎上增長3.5%至5.5%，而產能將約降低4%，同比基礎上。這一指導區間考慮到颶風米爾頓和由此導致的客戶取消將帶來約佔不到半個百分點的阻力。截至目前，本季度旅行需求仍然健康，假日旺季的預訂到目前爲止強勁，展示了休閒旅遊市場持續的韌性。指導區間代表另一次順序同比單位收入改善，得益於公司專注於戰術行動，包括網絡優化和產能調整，營銷和分銷的演進，以及繼續努力推進營收管理技術。
燃料成本和展望：
•2024年第三季度經濟燃料成本爲每加侖2.55美元1——在公司先前的指引區間之內——和 包括每加侖0.07美元的溢價費用和每加侖0.02美元的有利現金結算來自燃油衍生合同合同
•2024年第三季度燃油效率同比提高1.5％，主要原因是公司更多的-8飛機，這是公司燃油效率最高的飛機，佔其機隊比例
•截至2024年10月16日，公司在2024年第四季度至2027年底結算的燃料衍生品合約的公允市場價值爲 1.44 億美元
公司的多年燃料套期保值計劃繼續提供保護，防範能源價格的激增。 公司當前的燃料衍生品合約包含基於西德克薩斯中質原油和布倫特原油，以及像暖氣油這樣的精煉產品的組合工具。
每加侖經濟燃油價格敏感性4 提供的下表中的數據假設基於市場價格截至時與布倫特原油和精煉產品之間的關係 2024年10月16日.
| 預計經濟燃料價格每加侖， 含稅和燃料對沖保費 | ||||||||
| 布倫特原油平均價格 每桶價格 | 4Q 2024 | 2024 | ||||||
| $60 | $1.85 - $1.95 | $2.50 - $2.60 | ||||||
| $70 | $2.05 - $2.15 | $2.55 - $2.65 | ||||||
| 當前市場（a） | $2.25 - $2.35 | $2.60 - $2.70 | ||||||
| $90 | $2.70 - $2.80 | $2.70 - $2.80 | ||||||
| $100 | $2.90 - $3.00 | $2.75 - $2.85 | ||||||
| $110 | $3.10 - $3.20 | $2.80 - $2.90 | ||||||
| 公平市場價值的 在期間結算的燃料衍生品合約 | $800萬 | 5700萬美元 | ||||||
| 預估保險費用 | 3900萬美元 | 15800萬美元 | ||||||
此外，公司正在提供其預計燃料消耗的最大百分比6 在下表中列出的燃料衍生合約覆蓋的百分比：
| 時期 | 最大燃料套保百分比（a） | |||||||
| 2024 | 58% | |||||||
| 2025 | 47% | |||||||
| 2026 | 43% | |||||||
| 2027 | 不到10％ | |||||||
(a) 根據公司目前的可用座位英里計劃。到2024年第四季，公司目前對59%進行避險。
非燃料成本及展望
•2024年第三季度的營業費用按年增加6.6%，達到68億美元
•2024年第三季營業費用，不包括燃油費用、特別項目和利潤分享1，同比增加14.3%
•2024年第三季度的CASm-X同比增加了11.6%，落在公司先前指引的區間內。
公司第三季度的CASm-X增加幅度達到先前預期區間的較好一端。公司繼續採取緊急措施來控制成本，包括提供自願休假計劃，控制招聘以應對人手過剩的問題。公司也繼續期待從上個月公佈的成本計劃中獲得的節省，在未來三年內逐步增加，以在2027年達到超過 $50000萬的運行成本節省。
公司預計2024年第四季度CASm-X將在11%至13%的區間內增加，與去年同期相比，由於成本壓力持續增加，特別來自新的勞工合同。第四季度CASm-X進一步受到去年同期產能減少4%的壓力，以及與颶風米爾頓相關的航班取消所帶來的超過半個單位成本逆風。
公司預計其2024年全年有效稅率將約為24％。
產能、艦隊和資本支出：
•2024年第三季度容量較去年同期增加2.4%，與公司先前的指引一致。
•本公司於2024年第三季度收到九架-8型飛機，退役15架飛機（14架-700型飛機和一架-800型飛機），當季結束後，持有 811 架飛機。
•2024年第三季度資本支出支出金額達5.17億美元，主要是由飛機相關的資本支出，以及科技、設施和運營投資驅動
鑑於公司與波音的持續討論以及預期的飛機交付延遲，公司仍然計劃於2024年交付約20 -8架飛機，這與表格中顯示的合約60檔擺盤有所不同。公司還選擇在2024年退役另外六架飛機，使該年的總飛機退役數量達到約41架（其中37架-700和四架-800），導致2024年底的機隊規模約為796架飛機。
公司的航班時間表已發布至2025年6月4日。公司估計2024年第四季度的容量將下降約4％，而2025年第一季度的容量將在年度比較下下降1％至3％的區間內。公司預計2025年、2026年和2027年的年度容量增長將在每年1％至2％的範圍內，通過改善飛機轉機時間和推出深夜航班的策略倡議來資助。
公司現在估計其2024年的資本支出大約為21億美元，其中包括預計在2024年交付約20架波音飛機的約825百萬美元飛機資本支出。與先前預測的約25億美元相比的減少主要是由於對未來飛機交付時間的期望變化，因為波音的交付延遲持續到2025年。公司和波音繼續就飛機交付延遲對公司的財務衝擊進行持續討論。
自2024年7月25日期前公佈的財務結果以來，該公司行使了九項2025年交貨的-7期權，一項2026年交貨的-7期權，並將九個2025年-7的確認訂單轉換為2025年-8的確認訂單。以下表格提供了有關該公司合約訂單簿的進一步信息，並將其2024年10月24日期的合約訂單簿與其2024年7月25日期的先前訂單簿進行了比較。截至2024年10月24日期的合約訂單簿不包括交貨延遲的影響，並根據與波音的持續討論以及其生產能力的情況而可能發生變化。
2024年10月24日當前737合約60檔擺盤：
| the boeing company | |||||||||||||||||||||||
| -7個確定訂單 | -8個確定訂單 | -7或-8期權 | 總計 | ||||||||||||||||||||
| 2024 | 27 | 58 | — | 85 | (c) | ||||||||||||||||||
| 2025 | 40 | 30 | 3 | 73 | |||||||||||||||||||
| 2026 | 60 | — | 26 | 86 | |||||||||||||||||||
| 2027 | 19 | 46 | 25 | 90 | |||||||||||||||||||
| 2028 | 15 | 50 | 25 | 90 | |||||||||||||||||||
| 2029 | 38 | 34 | 18 | 90 | |||||||||||||||||||
| 2030 | 45 | — | 45 | 90 | |||||||||||||||||||
| 2031 | 45 | — | 45 | 90 | |||||||||||||||||||
| 289 | (a) | 218 | (b) | 187 | 694 | ||||||||||||||||||
(a) 波音和該公司獲得FAA發放的必要認證和批准，決定-7的交機時間。 FAA將最終判斷-7認證和投入服務的時間，因此公司不保證目前的估計和時間表正確。
(b) 公司有彈性將確定的訂單或期權指定為-7s或-8s，根據合同中所述的書面事先通知。
(c) 包括截至2024年9月30日已收到的19架-8交機。鑒於公司與波音持續進行的討論以及預期的飛機交機延遲，公司仍計劃在2024年交付約20架-8飛機。
2024年7月25日之前的737檔擺盤 (a):
| the boeing company | |||||||||||||||||||||||
| -7筆確認訂單 | -8筆確認訂單 | -7或-8項期權 | 總計 | ||||||||||||||||||||
| 2024 | 27 | 58 | — | 85 | |||||||||||||||||||
| 2025 | 40 | 21 | 12 | 73 | |||||||||||||||||||
| 2026 | 59 | — | 27 | 86 | |||||||||||||||||||
| 2027 | 19 | 46 | 25 | 90 | |||||||||||||||||||
| 2028 | 15 | 50 | 25 | 90 | |||||||||||||||||||
| 2029 | 38 | 34 | 18 | 90 | |||||||||||||||||||
| 2030 | 45 | — | 45 | 90 | |||||||||||||||||||
| 2031 | 45 | — | 45 | 90 | |||||||||||||||||||
| 288 | 209 | 197 | 694 | ||||||||||||||||||||
(a)『以前的737檔擺盤』僅供參考和比較之用，不應依賴。請查看『當前737合約訂單簿』以獲得公司當前的飛機訂單簿。
流動性和資本部署：
•公司於2024年第三季結束時，現金及現金等價物、短期投資合共達94億美元，並且具有10億美元的完全可提取循環信用額度。
•公司繼續擁有價值約171億美元的大量無抵押資產，其中包括142億美元的飛機價值和29億美元的非飛機資產，例如備用引擎、地勤設備和房地產業
•公司淨現金為正。7 經調整後的負債佔投資資本（"杠杆"）比例為46%，截至2024年9月30日 8 46%，截至2024年9月30日
•公司截至2024年9月30日截至今日已通過支付分紅派息歸還 431萬美元 至其股東。
•根據公司董事會於2024年9月授權的250億美元股份回購計劃，公司計劃很快推出2500萬美元的首期加速股份回購計劃（「2024年第四季度ASR計劃」）。在啟動2024年第四季度ASR 計劃後，公司將有225億美元剩餘於最近授權的250億美元股份回購計劃之下。
•公司在2024年第三季支付了1100萬美元以清償債務和租賃負債，其中包括50萬美元與租賃歸還和租賃買斷交易相關的本金以及600萬美元的租賃付款 公司在2024年第三季支付了1100萬美元以清償債務和租賃負債，其中包括500萬美元與租賃歸還和租賃買斷交易相關的本金以及600萬美元的租賃付款
獎項和表揚：
•上榜華爾街日報最佳管理公司名單
•西南航空快速獎勵® 由JP摩根大通發行的Premier和Priority信用卡在J.D. Power 2024年美國信用卡滿意度研究中名列前茅，成為兩大最受顧客滿意的共同品牌航空公司信用卡。9
•在Disability:IN的2024殘疾平等指数上取得領先成績後，被評為優秀的殘疾包容工作場所。
•西南航空的“再造以創新”的計畫在2024年的Skift IDEA大獎中，獲得了人們和社區類別的Changemakers獎。
•被丹佛商業雜誌譽為 2024年公益合作夥伴獲獎者。
•獲得Qurator認證，這是夏威夷旅遊局對基於夏威夷運營的企業的卓越標誌。
環保母基、社會和治理（"esg"）:
•SAFFiRE Renewables，西南航空可再生能源投資組合的一部分，在堪薩斯州自由市的Conestoga Energy Arkalon Energy設施開始在其試點工廠建設。這標誌著SAFFiRE將玉米殘莖轉化為豐富的低碳飼料，以製造可持續航空燃料的重要一步。
•與Archer航空簽署諒解備忘錄，就在加州機場展開電動空中計程車網絡計劃，利用Archer的eVTOL飛行器，而此計劃將在西南航空營運的加州機場執行。
•2024年7月慶祝殘障驕傲月，表彰殘障人士及其對社會的貢獻。
•宣布與國家公園基金會合作，該基金會是國家公園管理局的官方慈善合作夥伴，致力於為現在和未來的世代保護和增強美國的國家公園
•慶祝西班牙裔美國人在西班牙裔傳統月期間的貢獻和影響力
•造訪southwest.com/citizenship以獲取有關公司持續推行esg的詳細資訊
財務補充資訊：
公司將提供有關倡議發展進展和預期財務結果的更多細節，包括一份評分卡。這將在投資者關係網站上提供。
https://www.southwestairlinesinvestorrelations.com.
https://www.southwestairlinesinvestorrelations.com.
會議通話：
公司將在今天下午12:30進行第三季度2024年業績的電話看漲。要收聽會議電話的現場廣播，請前往
https://www.southwestairlinesinvestorrelations.com.
註腳
1關於非GAAP財務指標使用的注意事項，請參閱有關特殊項目的額外資訊。此外，有關特殊項目和經濟結果的資訊已包含在附表《報告金額與非GAAP指標（也稱為"不包括特殊項目"）的調解表》中。
2包括$94億的現金及現金等價物和短期投資，以及一條額度完全可用的旋轉信貸額度$10億。
3投資資本回報率（"ROIC"）。有關非公告財務措施使用的附註中有關ROIC的其他信息。此外，有關ROIC和經濟結果的信息已包含在附表"非公告投資資本回報率（ROIC）"中。.
4根據該公司現有的燃料衍生品合約和截至2024年10月16日的市場價格，預計2024年第四季度和全年的經濟燃料成本每加侖範圍在$2.25至$2.35和$2.60至$2.70。經濟燃料成本預測不反映特殊事項的潛在影響，因為公司無法可靠地預測或估計與能源市場波動相關的避險會計影響，或影響其未來期間的基本報表。因此，公司認為對預期結果的非依照通用會計原則的財務措施與相應的GAAP財務措施進行對帳而不需不合理的付出是沒有意義或不可得的。請參閱有關使用非依照GAAP財務措施的注意事項。
5預測不反映燃油和石油費用、特別項目和利潤共享可能產生的潛在影響，因為公司無法可靠地預測或估計這些項目或費用，或它們對未來時期的基本報表的影響，特別考慮到燃油和石油費用這一項目的顯著波動性。因此，公司認為將非通用會計原則財務指標與這些預期結果的等效通用會計原則財務指標進行協調，非常費力而無意義或不可得到。
6公司的最大燃料避險比例是通過衍生合約所涵蓋的最大加侖數除以公司估計的每個相應期間將消耗的總燃料加侖數來計算。公司通過衍生合約所涵蓋的最大加侖數可能存在於不同的執行價格，並且執行價格可能顯著高於當前市場價格。在任何特定期間內最終實行的衍生合約所涵蓋的加侖數可能與用於計算公司最大燃料避險比例的加侖數差異很大，因為市場價格和公司的燃料消耗波動。
7淨現金情況是指現金及現金等價物和短期投資的總和，減去短期和長期債務的總和。
8See Note Regarding Use of Non-GAAP Financial Measures for an explanation of the Company's leverage calculation.
9Southwest Rapid Rewards Premier Card, issued by J.P. Morgan Chase Bank, N.A., received the highest score in the Airline Co-Brand Credit Cards segment of the J.D. Power 2024 U.S. Credit Card Satisfaction Study. This study profiles the experiences of customers from the largest credit card issuers. Visit jdpower.com/awards for more details.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company’s planned shareholder returns; (ii) the Company’s initiatives, strategic priorities and focus areas, goals, and opportunities, including with respect to returning to strong financial performance, creating
shareholder value, restoring margins, shareholder returns, improved operational efficiency, capital allocation, Customer Experience enhancements, and improved return on invested capital; (iii) the Company's financial and operational outlook, expectations, goals, plans, and projected results of operations, including with respect to its initiatives, and including factors and assumptions underlying the Company's expectations and projections; (iv) the Company’s plans and expectations with respect to its network, its capacity, its network optimization efforts, its network plan, and capacity and network adjustments, and including factors and assumptions underlying the Company's expectations and projections; (v) the Company's expectations with respect to fuel costs, hedging gains, and fuel efficiency, and the Company's related management of risks associated with changing jet fuel prices, including factors underlying the Company's expectations; (vi) the Company's plans, estimates, and assumptions related to repayment of debt obligations, interest expense, effective tax rate, and capital spending, including factors and assumptions underlying the Company's expectations and projections; (vii) the Company’s fleet plans and expectations, including with respect to fleet utilization, fleet modernization, flexibility, and expected fleet deliveries and retirements, and including factors and assumptions underlying the Company's plans and expectations; (viii) the Company’s plans and expectations with respect to marketing and distribution evolution and its continued efforts to advance revenue management techniques; (ix)
the Company’s labor plans and expectations, including the Company’s hiring and headcount plans and expectations; and (x) the Company’s plans and expectations with respect to redeye flying and reducing turn times. These forward-looking statements are based on the Company's current estimates, intentions, beliefs, expectations, goals, strategies, and projections for the future and are not guarantees of future performance. Forward-looking statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, the impact of fears or actual outbreaks of diseases, extreme or severe weather and natural disasters, actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities), consumer perception, economic conditions, banking conditions, fears or actual acts of terrorism or war, sociodemographic trends, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (ii) the Company's ability to timely and effectively implement, transition, operate, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives, including with respect to revenue management and assigned and premium seating; (iii) the cost and effects of the actions of activist shareholders; (iv) the Company’s ability to obtain and maintain adequate infrastructure and equipment to support its operations and initiatives; (v) the impact of fuel price changes, fuel price volatility, volatility of commodities used by the Company for hedging jet fuel, and any changes to the Company's fuel hedging strategies and positions, on the Company's business plans and results of operations; (vi) the Company's dependence on The Boeing Company (“Boeing”) and Boeing suppliers with respect to the Company's aircraft deliveries, Boeing MAX 7 aircraft certifications, fleet and capacity plans, operations, maintenance, strategies, and goals; (vii) the Company's dependence on the Federal Aviation Administration with respect to safety approvals for the new cabin layout and the certification of the Boeing MAX 7 aircraft; (viii) the Company's dependence on other third parties, in particular with respect to its technology plans, its plans and expectations related to revenue management, operational reliability, fuel supply, maintenance, Global Distribution Systems, environmental sustainability, and the impact on the Company's operations and results of operations of any third party delays or nonperformance; (ix) the Company’s ability to timely and effectively prioritize its initiatives and focus areas and related expenditures; (x) the impact of labor matters on the Company's business decisions, plans, strategies, and results; (xi) the impact of governmental regulations and other governmental actions on the Company's business plans, results, and operations; (xii) the Company's dependence on its workforce, including its ability to employ and retain sufficient numbers of qualified Employees with appropriate skills and expertise to effectively and efficiently maintain its operations and execute the Company’s plans, strategies, and initiatives; (xiii) the emergence of additional costs or effects associated with the cancelled flights in December 2022, including litigation, government investigation and actions, and internal actions; and (xiv) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024.
Investor Contact:
Southwest Airlines Investor Relations
214-792-4415
Media Contact:
Southwest Airlines Media Relations
214-792-4847
swamedia@wnco.com
SW-QFS
Southwest Airlines Co.
Condensed Consolidated Statement of Income
(in millions, except per share amounts)
(unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||
| 2024 | 2023 | Percent Change | 2024 | 2023 | Percent Change | ||||||||||||||||||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||||||||||||||||||||
| Passenger | $ | 6,250 | $ | 5,912 | 5.7 | $ | 18,673 | $ | 17,426 | 7.2 | |||||||||||||||||||||||||
| Freight | 43 | 44 | (2.3) | 131 | 131 | — | |||||||||||||||||||||||||||||
| Other | 577 | 569 | 1.4 | 1,749 | 1,711 | 2.2 | |||||||||||||||||||||||||||||
| Total operating revenues | 6,870 | 6,525 | 5.3 | 20,553 | 19,268 | 6.7 | |||||||||||||||||||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||||||||||||||||||||
| Salaries, wages, and benefits | 3,070 | 2,728 | 12.5 | 9,010 | 7,991 | 12.8 | |||||||||||||||||||||||||||||
| Fuel and oil | 1,417 | 1,564 | (9.4) | 4,548 | 4,514 | 0.8 | |||||||||||||||||||||||||||||
| Maintenance materials and repairs | 335 | 326 | 2.8 | 1,046 | 836 | 25.1 | |||||||||||||||||||||||||||||
| Landing fees and airport rentals | 493 | 457 | 7.9 | 1,468 | 1,324 | 10.9 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 438 | 375 | 16.8 | 1,250 | 1,107 | 12.9 | |||||||||||||||||||||||||||||
| Other operating expenses | 1,079 | 958 | 12.6 | 3,188 | 2,868 | 11.2 | |||||||||||||||||||||||||||||
| Total operating expenses | 6,832 | 6,408 | 6.6 | 20,510 | 18,640 | 10.0 | |||||||||||||||||||||||||||||
| OPERATING INCOME | 38 | 117 | (67.5) | 43 | 628 | (93.2) | |||||||||||||||||||||||||||||
| OTHER EXPENSES (INCOME): | |||||||||||||||||||||||||||||||||||
| Interest expense | 63 | 63 | — | 191 | 193 | (1.0) | |||||||||||||||||||||||||||||
| Capitalized interest | (9) | (4) | 125.0 | (24) | (15) | 60.0 | |||||||||||||||||||||||||||||
| Interest income | (121) | (156) | (22.4) | (392) | (425) | (7.8) | |||||||||||||||||||||||||||||
| Other (gains) losses, net | 16 | (23) | n.m. | (1) | (44) | (97.7) | |||||||||||||||||||||||||||||
| Total other income | (51) | (120) | (57.5) | (226) | (291) | (22.3) | |||||||||||||||||||||||||||||
| INCOME BEFORE INCOME TAXES | 89 | 237 | (62.4) | 269 | 919 | (70.7) | |||||||||||||||||||||||||||||
| PROVISION FOR INCOME TAXES | 22 | 44 | (50.0) | 65 | 202 | (67.8) | |||||||||||||||||||||||||||||
| NET INCOME | $ | 67 | $ | 193 | (65.3) | $ | 204 | $ | 717 | (71.5) | |||||||||||||||||||||||||
| NET INCOME PER SHARE: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 0.11 | $ | 0.32 | (65.6) | $ | 0.34 | $ | 1.20 | (71.7) | |||||||||||||||||||||||||
| Diluted | $ | 0.11 | $ | 0.31 | (64.5) | $ | 0.34 | $ | 1.15 | (70.4) | |||||||||||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | |||||||||||||||||||||||||||||||||||
| Basic | 599 | 596 | 0.5 | 598 | 595 | 0.5 | |||||||||||||||||||||||||||||
| Diluted | 601 | 640 | (6.1) | 643 | 639 | 0.6 | |||||||||||||||||||||||||||||
Southwest Airlines Co.
Reconciliation of Reported Amounts to Non-GAAP Financial Measures (excluding special items)
(See Note Regarding Use of Non-GAAP Financial Measures)
(in millions, except per share and per ASM amounts)(unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||
| September 30, | Percent | September 30, | Percent | ||||||||||||||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | ||||||||||||||||||||||||||||||
| Fuel and oil expense, unhedged | $ | 1,409 | $ | 1,616 | $ | 4,500 | $ | 4,608 | |||||||||||||||||||||||||||
| Add: Premium cost of fuel contracts designated as hedges | 34 | 30 | 114 | 91 | |||||||||||||||||||||||||||||||
| Deduct: Fuel hedge gains included in Fuel and oil expense, net | (26) | (82) | (66) | (185) | |||||||||||||||||||||||||||||||
| Fuel and oil expense, as reported | $ | 1,417 | $ | 1,564 | (9.4) | $ | 4,548 | $ | 4,514 | 0.8 | |||||||||||||||||||||||||
| Add (Deduct): Fuel hedge contracts settling in the current period, but for which (gains) losses were reclassified from AOCI | 14 | (11) | 14 | (12) | |||||||||||||||||||||||||||||||
| Add: Premium cost of fuel contracts not designated as hedges | 5 | — | 5 | — | |||||||||||||||||||||||||||||||
| Fuel and oil expense, excluding special items (economic) | $ | 1,436 | $ | 1,553 | (7.5) | $ | 4,567 | $ | 4,502 | 1.4 | |||||||||||||||||||||||||
| Total operating expenses, net, as reported | $ | 6,832 | $ | 6,408 | $ | 20,510 | $ | 18,640 | |||||||||||||||||||||||||||
| Deduct: Labor contract adjustment (a) | — | (96) | (9) | (180) | |||||||||||||||||||||||||||||||
| Add (Deduct): Fuel hedge contracts settling in the current period, but for which (gains) losses were reclassified from AOCI | 14 | (11) | 14 | (12) | |||||||||||||||||||||||||||||||
| Add: Premium cost of fuel contracts not designated as hedges | 5 | — | 5 | — | |||||||||||||||||||||||||||||||
| Deduct: Litigation settlements | — | — | (7) | (12) | |||||||||||||||||||||||||||||||
| Deduct: Professional advisory fees | (13) | — | (20) | — | |||||||||||||||||||||||||||||||
| Total operating expenses, excluding special items | $ | 6,838 | $ | 6,301 | 8.5 | $ | 20,493 | $ | 18,436 | 11.2 | |||||||||||||||||||||||||
| Deduct: Fuel and oil expense, excluding special items (economic) | (1,436) | (1,553) | (4,567) | (4,502) | |||||||||||||||||||||||||||||||
| Operating expenses, excluding Fuel and oil expense and special items | $ | 5,402 | $ | 4,748 | 13.8 | $ | 15,926 | $ | 13,934 | 14.3 | |||||||||||||||||||||||||
| Deduct: Profitsharing expense | (18) | (38) | (49) | (158) | |||||||||||||||||||||||||||||||
| Operating expenses, excluding Fuel and oil expense, special items, and profitsharing | $ | 5,384 | $ | 4,710 | 14.3 | $ | 15,877 | $ | 13,776 | 15.3 | |||||||||||||||||||||||||
| Operating income, as reported | $ | 38 | $ | 117 | $ | 43 | $ | 628 | |||||||||||||||||||||||||||
| Add: Labor contract adjustment (a) | — | 96 | 9 | 180 | |||||||||||||||||||||||||||||||
| Add (Deduct): Fuel hedge contracts settling in the current period, but for which (gains) losses were reclassified from AOCI | (14) | 11 | (14) | 12 | |||||||||||||||||||||||||||||||
| Deduct: Premium cost of fuel contracts not designated as hedges | (5) | — | (5) | — | |||||||||||||||||||||||||||||||
| Add: Litigation settlements | — | — | 7 | 12 | |||||||||||||||||||||||||||||||
| Add: Professional advisory fees | 13 | — | 20 | — | |||||||||||||||||||||||||||||||
| Operating income, excluding special items | $ | 32 | $ | 224 | (85.7) | $ | 60 | $ | 832 | (92.8) | |||||||||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||
| September 30, | Percent | September 30, | Percent | ||||||||||||||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | ||||||||||||||||||||||||||||||
| Other (gains) losses, net, as reported | $ | 16 | $ | (23) | $ | (1) | $ | (44) | |||||||||||||||||||||||||||
| Add (Deduct): Mark-to-market impact from fuel contracts settling in future periods | (29) | 33 | (31) | 26 | |||||||||||||||||||||||||||||||
| Deduct: Premium cost of fuel contracts not designated as hedges | (5) | — | (5) | — | |||||||||||||||||||||||||||||||
| Add: Unrealized mark-to-market adjustment on available for sale securities | — | — | — | 4 | |||||||||||||||||||||||||||||||
| Other (gains) losses, net, excluding special items | $ | (18) | $ | 10 | n.m. | $ | (37) | $ | (14) | 164.3 | |||||||||||||||||||||||||
| Income before income taxes, as reported | $ | 89 | $ | 237 | $ | 269 | $ | 919 | |||||||||||||||||||||||||||
| Add: Labor contract adjustment (a) | — | 96 | 9 | 180 | |||||||||||||||||||||||||||||||
| Add (Deduct): Fuel hedge contracts settling in the current period, but for which (gains) losses were reclassified from AOCI | (14) | 11 | (14) | 12 | |||||||||||||||||||||||||||||||
| Add (Deduct): Mark-to-market impact from fuel contracts settling in future periods | 29 | (33) | 31 | (26) | |||||||||||||||||||||||||||||||
| Add: Litigation settlements | — | — | 7 | 12 | |||||||||||||||||||||||||||||||
| Add: Professional advisory fees | 13 | — | 20 | — | |||||||||||||||||||||||||||||||
| Deduct: Unrealized mark-to-market adjustment on available for sale securities | — | — | — | (4) | |||||||||||||||||||||||||||||||
| Income before income taxes, excluding special items | $ | 117 | $ | 311 | (62.4) | $ | 322 | $ | 1,093 | (70.5) | |||||||||||||||||||||||||
| Provision for income taxes, as reported | $ | 22 | $ | 44 | $ | 65 | $ | 202 | |||||||||||||||||||||||||||
| Add: Net income tax impact of fuel and special items (b) | 6 | 27 | 16 | 55 | |||||||||||||||||||||||||||||||
| Provision for income taxes, net, excluding special items | $ | 28 | $ | 71 | (60.6) | $ | 81 | $ | 257 | (68.5) | |||||||||||||||||||||||||
| Net income, as reported | $ | 67 | $ | 193 | $ | 204 | $ | 717 | |||||||||||||||||||||||||||
| Add: Labor contract adjustment (a) | — | 96 | 9 | 180 | |||||||||||||||||||||||||||||||
| Add (Deduct): Fuel hedge contracts settling in the current period, but for which (gains) losses were reclassified from AOCI | (14) | 11 | (14) | 12 | |||||||||||||||||||||||||||||||
| Add (Deduct): Mark-to-market impact from fuel contracts settling in future periods | 29 | (33) | 31 | (26) | |||||||||||||||||||||||||||||||
| Add: Litigation settlements | — | — | 7 | 12 | |||||||||||||||||||||||||||||||
| Add: Professional advisory fees | 13 | — | 20 | — | |||||||||||||||||||||||||||||||
| Deduct: Unrealized mark-to-market adjustment on available for sale securities | — | — | — | (4) | |||||||||||||||||||||||||||||||
| Deduct: Net income tax impact of special items (b) | (6) | (27) | (16) | (55) | |||||||||||||||||||||||||||||||
| Net income, excluding special items | $ | 89 | $ | 240 | (62.9) | $ | 241 | $ | 836 | (71.2) | |||||||||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||
| September 30, | Percent | September 30, | Percent | ||||||||||||||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | ||||||||||||||||||||||||||||||
| Net income per share, diluted, as reported | $ | 0.11 | $ | 0.31 | $ | 0.34 | $ | 1.15 | |||||||||||||||||||||||||||
| Add: Impact of special items | 0.01 | 0.14 | 0.06 | 0.29 | |||||||||||||||||||||||||||||||
| Add (Deduct): Net impact of net income above from fuel contracts divided by dilutive shares | 0.02 | (0.03) | 0.03 | (0.02) | |||||||||||||||||||||||||||||||
| Deduct: Net income tax impact of special items (b) | — | (0.04) | (0.03) | (0.09) | |||||||||||||||||||||||||||||||
| Add: GAAP to Non-GAAP diluted weighted average shares difference (c) | $ | 0.01 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||
| Net income per share, diluted, excluding special items | $ | 0.15 | $ | 0.38 | (60.5) | $ | 0.40 | $ | 1.33 | (69.9) | |||||||||||||||||||||||||
| Operating expenses per ASM (cents) | ¢ | 15.11 | ¢ | 14.51 | ¢ | 15.34 | ¢ | 14.93 | |||||||||||||||||||||||||||
| Deduct: Impact of special items | (0.03) | (0.24) | (0.03) | (0.16) | |||||||||||||||||||||||||||||||
| Deduct: Fuel and oil expense divided by ASMs | (3.14) | (3.52) | (3.40) | (3.61) | |||||||||||||||||||||||||||||||
| Deduct: Profitsharing expense divided by ASMs | (0.03) | (0.08) | (0.04) | (0.12) | |||||||||||||||||||||||||||||||
| Operating expenses per ASM, excluding Fuel and oil expense, special items, and profitsharing (cents) | ¢ | 11.91 | ¢ | 10.67 | 11.6 | ¢ | 11.87 | ¢ | 11.04 | 7.5 | |||||||||||||||||||||||||
(a) Represents incremental expense associated with contract ratification bonuses for various workgroups related to additional compensation for services performed by Employees outside of the applicable fiscal period. See the Note Regarding Use of Non-GAAP Financial Measures for further information.
(b) Tax amounts for each individual special item are calculated at the Company's effective rate for the applicable period and totaled in this line item.
(c) Adjustment related to GAAP and Non-GAAP diluted weighted average shares difference due to the Convertible Notes being anti-dilutive for GAAP but dilutive for Non-GAAP for the three months ended September 30, 2024.
Southwest Airlines Co.
Comparative Consolidated Operating Statistics
(unaudited)
Relevant comparative operating statistics for the three and nine months ended September 30, 2024 and 2023 are included below. The Company provides these operating statistics because they are commonly used in the airline industry and, as such, allow readers to compare the Company’s performance against its results for the prior year period, as well as against the performance of the Company’s peers.
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||
| September 30, | Percent | September 30, | Percent | ||||||||||||||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | ||||||||||||||||||||||||||||||
| Revenue passengers carried (000s) | 35,516 | 35,349 | 0.5 | 105,897 | 101,296 | 4.5 | |||||||||||||||||||||||||||||
| Enplaned passengers (000s) | 44,711 | 44,598 | 0.3 | 132,875 | 127,050 | 4.6 | |||||||||||||||||||||||||||||
| Revenue passenger miles (RPMs) (in millions) (a) | 36,735 | 35,624 | 3.1 | 108,044 | 100,676 | 7.3 | |||||||||||||||||||||||||||||
| Available seat miles (ASMs) (in millions) (b) | 45,219 | 44,169 | 2.4 | 133,717 | 124,810 | 7.1 | |||||||||||||||||||||||||||||
| Load factor (c) | 81.2 | % | 80.7 | % | 0.5 pts. | 80.8 | % | 80.7 | % | 0.1 pts. | |||||||||||||||||||||||||
| Average length of passenger haul (miles) | 1,034 | 1,008 | 2.6 | 1,020 | 994 | 2.6 | |||||||||||||||||||||||||||||
| Average aircraft stage length (miles) | 770 | 735 | 4.8 | 763 | 726 | 5.1 | |||||||||||||||||||||||||||||
| Trips flown | 364,609 | 374,926 | (2.8) | 1,090,337 | 1,074,136 | 1.5 | |||||||||||||||||||||||||||||
| Seats flown (000s) (d) | 58,119 | 59,494 | (2.3) | 173,588 | 170,116 | 2.0 | |||||||||||||||||||||||||||||
| Seats per trip (e) | 159.4 | 158.7 | 0.4 | 159.2 | 158.4 | 0.5 | |||||||||||||||||||||||||||||
| Average passenger fare | $ | 175.97 | $ | 167.24 | 5.2 | $ | 176.34 | $ | 172.03 | 2.5 | |||||||||||||||||||||||||
| Passenger revenue yield per RPM (cents) (f) | 17.01 | 16.60 | 2.5 | 17.28 | 17.31 | (0.2) | |||||||||||||||||||||||||||||
| RASM (cents) (g) | 15.19 | 14.77 | 2.8 | 15.37 | 15.44 | (0.5) | |||||||||||||||||||||||||||||
| PRASM (cents) (h) | 13.82 | 13.38 | 3.3 | 13.96 | 13.96 | — | |||||||||||||||||||||||||||||
| CASM (cents) (i) | 15.11 | 14.51 | 4.1 | 15.34 | 14.93 | 2.7 | |||||||||||||||||||||||||||||
| CASM, excluding Fuel and oil expense (cents) | 11.97 | 10.97 | 9.1 | 11.94 | 11.32 | 5.5 | |||||||||||||||||||||||||||||
| CASM, excluding special items (cents) | 15.12 | 14.27 | 6.0 | 15.33 | 14.77 | 3.8 | |||||||||||||||||||||||||||||
| CASM, excluding Fuel and oil expense and special items (cents) | 11.95 | 10.75 | 11.2 | 11.91 | 11.16 | 6.7 | |||||||||||||||||||||||||||||
| CASM, excluding Fuel and oil expense, special items, and profitsharing expense (cents) | 11.91 | 10.67 | 11.6 | 11.87 | 11.04 | 7.5 | |||||||||||||||||||||||||||||
| Fuel costs per gallon, including fuel tax (unhedged) | $ | 2.50 | $ | 2.89 | (13.5) | $ | 2.70 | $ | 2.91 | (7.2) | |||||||||||||||||||||||||
| Fuel costs per gallon, including fuel tax | $ | 2.52 | $ | 2.80 | (10.0) | $ | 2.73 | $ | 2.85 | (4.2) | |||||||||||||||||||||||||
| Fuel costs per gallon, including fuel tax (economic) | $ | 2.55 | $ | 2.78 | (8.3) | $ | 2.74 | $ | 2.85 | (3.9) | |||||||||||||||||||||||||
| Fuel consumed, in gallons (millions) | 562 | 557 | 0.9 | 1,663 | 1,578 | 5.4 | |||||||||||||||||||||||||||||
| Active fulltime equivalent Employees | 73,463 | 74,181 | (1.0) | 73,463 | 74,181 | (1.0) | |||||||||||||||||||||||||||||
| Aircraft at end of period (j) | 811 | 817 | (0.7) | 811 | 817 | (0.7) | |||||||||||||||||||||||||||||
(a) A revenue passenger mile is one paying passenger flown one mile. Also referred to as "traffic," which is a measure of demand for a given period.
(b) An available seat mile is one seat (empty or full) flown one mile. Also referred to as "capacity," which is a measure of the space available to carry passengers in a given period.
(c) Revenue passenger miles divided by available seat miles.
(d) Seats flown is calculated using total number of seats available by aircraft type multiplied by the total trips flown by the same aircraft type during a particular period.
(e) Seats per trip is calculated by dividing seats flown by trips flown.
(f) Calculated as passenger revenue divided by revenue passenger miles. Also referred to as "yield," this is the average cost paid by a paying passenger to fly one mile, which is a measure of revenue production and fares.
(g) RASM (unit revenue) - Operating revenue yield per ASM, calculated as operating revenue divided by available seat miles. Also referred to as "operating unit revenues," this is a measure of operating revenue production based on the total available seat miles flown during a particular period.
(h) PRASM (Passenger unit revenue) - Passenger revenue yield per ASM, calculated as passenger revenue divided by available seat miles. Also referred to as “passenger unit revenues,” this is a measure of passenger revenue production based on the total available seat miles flown during a particular period.
(i) CASM (unit costs) - Operating expenses per ASM, calculated as operating expenses divided by available seat miles. Also referred to as "unit costs" or "cost per available seat mile," this is the average cost to fly an aircraft seat (empty or full) one mile, which is a measure of cost efficiencies.
(j) Included three Boeing 737 Next Generation aircraft in storage as of September 30, 2023.
Southwest Airlines Co.
Non-GAAP Return on Invested Capital (ROIC)
(See Note Regarding Use of Non-GAAP Financial Measures)
(in millions)
(unaudited)
| Twelve months ended | ||||||||
| September 30, 2024 | ||||||||
| Operating loss, as reported | $ | (361) | ||||||
| TWU 555 contract adjustment | 9 | |||||||
| SWAPA contract adjustment | 354 | |||||||
| Net impact from fuel contracts | (14) | |||||||
| Professional advisory fees | 20 | |||||||
| DOT settlement | 107 | |||||||
| Litigation settlements | 7 | |||||||
| Operating income, non-GAAP | $ | 122 | ||||||
| Net adjustment for aircraft leases (a) | 128 | |||||||
| Adjusted operating income, non-GAAP (A) | $ | 250 | ||||||
| Non-GAAP tax rate (B) | 24.3 | % | (d) | |||||
| Net operating profit after-tax, NOPAT (A* (1-B) = C) | $ | 189 | ||||||
| Debt, including finance leases (b) | $ | 8,005 | ||||||
| Equity (b) | 10,528 | |||||||
| Net present value of aircraft operating leases (b) | 910 | |||||||
| Average invested capital | $ | 19,443 | ||||||
| Equity adjustment for hedge accounting (c) | (39) | |||||||
| Adjusted average invested capital (D) | $ | 19,404 | ||||||
| Non-GAAP ROIC, pre-tax (A/D) | 1.3 | % | ||||||
| Non-GAAP ROIC, after-tax (C/D) | 1.0 | % | ||||||
(a) Net adjustment related to presumption that all aircraft in fleet are owned (i.e., the impact of eliminating aircraft rent expense and replacing with estimated depreciation expense for those same aircraft). The Company makes this adjustment to enhance comparability to other entities that have different capital structures by utilizing alternative financing decisions.
(b) Calculated as an average of the five most recent quarter end balances or remaining obligations. The Net present value of aircraft operating leases represents the assumption that all aircraft in the Company’s fleet are owned, as it reflects the remaining contractual commitments discounted at the Company's estimated incremental borrowing rate as of the time each individual lease was signed.
(c) The Equity adjustment in the denominator adjusts for the cumulative impacts, in Accumulated other comprehensive income and Retained earnings, of gains and/or losses that will settle in future periods, including those associated with the Company's fuel hedges. The current period impact of these gains and/or losses is reflected in the Net impact from fuel contracts in the numerator.
(d) The GAAP twelve month rolling tax rate as of September 30, 2024, was (186.0) percent, and the Non-GAAP twelve month rolling tax rate was 24.3 percent. The GAAP twelve month rolling tax rate as of September 30, 2024 is negative primarily due to the Company's pre-tax book loss for the twelve months ended September 30, 2024. See Note Regarding Use of Non-GAAP Financial Measures for additional information.
(d) The GAAP twelve month rolling tax rate as of September 30, 2024, was (186.0) percent, and the Non-GAAP twelve month rolling tax rate was 24.3 percent. The GAAP twelve month rolling tax rate as of September 30, 2024 is negative primarily due to the Company's pre-tax book loss for the twelve months ended September 30, 2024. See Note Regarding Use of Non-GAAP Financial Measures for additional information.
Southwest Airlines Co.
Condensed Consolidated Balance Sheet
(in millions)
(unaudited)
| September 30, 2024 | December 31, 2023 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 8,503 | $ | 9,288 | |||||||
| Short-term investments | 879 | 2,186 | |||||||||
| Accounts and other receivables | 1,177 | 1,154 | |||||||||
| Inventories of parts and supplies, at cost | 770 | 807 | |||||||||
| Prepaid expenses and other current assets | 601 | 520 | |||||||||
| Total current assets | 11,930 | 13,955 | |||||||||
| Property and equipment, at cost: | |||||||||||
| Flight equipment | 26,394 | 26,060 | |||||||||
| Ground property and equipment | 7,955 | 7,460 | |||||||||
| Deposits on flight equipment purchase contracts | 428 | 236 | |||||||||
| Assets constructed for others | 87 | 62 | |||||||||
| 34,864 | 33,818 | ||||||||||
| Less allowance for depreciation and amortization | 15,091 | 14,443 | |||||||||
| 19,773 | 19,375 | ||||||||||
| Goodwill | 970 | 970 | |||||||||
| Operating lease right-of-use assets | 1,101 | 1,223 | |||||||||
| Other assets | 1,073 | 964 | |||||||||
| $ | 34,847 | $ | 36,487 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 1,518 | $ | 1,862 | |||||||
| Accrued liabilities | 2,096 | 3,606 | |||||||||
| Current operating lease liabilities | 202 | 208 | |||||||||
| Air traffic liability | 6,743 | 6,551 | |||||||||
| Current maturities of long-term debt | 2,930 | 29 | |||||||||
| Total current liabilities | 13,489 | 12,256 | |||||||||
| Long-term debt less current maturities | 5,075 | 7,978 | |||||||||
| Air traffic liability - noncurrent | 1,957 | 1,728 | |||||||||
| Deferred income taxes | 2,094 | 2,044 | |||||||||
| Noncurrent operating lease liabilities | 888 | 985 | |||||||||
| Other noncurrent liabilities | 933 | 981 | |||||||||
| Stockholders' equity: | |||||||||||
| Common stock | 888 | 888 | |||||||||
| Capital in excess of par value | 4,180 | 4,153 | |||||||||
| Retained earnings | 16,178 | 16,297 | |||||||||
| Accumulated other comprehensive income | (37) | — | |||||||||
| Treasury stock, at cost | (10,798) | (10,823) | |||||||||
| Total stockholders' equity | 10,411 | 10,515 | |||||||||
| $ | 34,847 | $ | 36,487 | ||||||||
Southwest Airlines Co.
Condensed Consolidated Statement of Cash Flows
(in millions) (unaudited)
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||
| Net income | $ | 67 | $ | 193 | $ | 204 | $ | 717 | |||||||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||||||||
| Depreciation and amortization | 438 | 375 | 1,250 | 1,107 | |||||||||||||||||||
| Unrealized mark-to-market adjustment on available for sale securities | — | — | — | (4) | |||||||||||||||||||
| Unrealized/realized gain (loss) on fuel derivative instruments | 15 | (21) | 17 | (14) | |||||||||||||||||||
| Deferred income taxes | 19 | 57 | 62 | 214 | |||||||||||||||||||
| Changes in certain assets and liabilities: | |||||||||||||||||||||||
| Accounts and other receivables | 193 | (216) | (80) | (405) | |||||||||||||||||||
| Other assets | (13) | (35) | 4 | 74 | |||||||||||||||||||
| Accounts payable and accrued liabilities | (196) | 352 | (1,668) | 645 | |||||||||||||||||||
| Air traffic liability | (377) | (59) | 421 | 750 | |||||||||||||||||||
| Other liabilities | (18) | (89) | (136) | (180) | |||||||||||||||||||
| Cash collateral received from (provided to) derivative counterparties | (8) | 40 | (28) | (6) | |||||||||||||||||||
| Other, net | (7) | 19 | (60) | (159) | |||||||||||||||||||
| Net cash provided by (used in) operating activities | 113 | 616 | (14) | 2,739 | |||||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||
| Capital expenditures | (517) | (842) | (1,594) | (2,812) | |||||||||||||||||||
| Assets constructed for others | (10) | (8) | (26) | (23) | |||||||||||||||||||
| Purchases of short-term investments | (636) | (1,620) | (3,845) | (5,347) | |||||||||||||||||||
| Proceeds from sales of short-term and other investments | 1,621 | 2,406 | 5,160 | 5,914 | |||||||||||||||||||
| Other, net | — | — | (29) | — | |||||||||||||||||||
| Net cash provided by (used in) investing activities | 458 | (64) | (334) | (2,268) | |||||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||
| Payroll Support Program stock warrants repurchase | — | — | (6) | — | |||||||||||||||||||
| Proceeds from Employee stock plans | 15 | 13 | 46 | 36 | |||||||||||||||||||
| Payments of long-term debt and finance lease obligations | (11) | (11) | (27) | (78) | |||||||||||||||||||
| Payments of cash dividends | (216) | (214) | (431) | (428) | |||||||||||||||||||
| Other, net | 2 | (1) | (19) | 4 | |||||||||||||||||||
| Net cash used in financing activities | (210) | (213) | (437) | (466) | |||||||||||||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 361 | 339 | (785) | 5 | |||||||||||||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 8,142 | 9,158 | 9,288 | 9,492 | |||||||||||||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 8,503 | $ | 9,497 | $ | 8,503 | $ | 9,497 | |||||||||||||||
NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES
The Company's unaudited Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). These GAAP financial statements may include (i) unrealized noncash adjustments and reclassifications, which can be significant, as a result of accounting requirements and elections made under accounting pronouncements relating to derivative instruments and hedging and (ii) other charges and benefits the Company believes are unusual and/or infrequent in nature and thus may make comparisons to its prior or future performance difficult.
As a result, the Company also provides financial information in this release that was not prepared in accordance with GAAP and should not be considered as an alternative to the information prepared in accordance with GAAP. The Company provides supplemental non-GAAP financial information (also referred to as "excluding special items"), including results that it refers to as "economic," which the Company's management utilizes to evaluate its ongoing financial performance and the Company believes provides additional insight to investors as supplemental information to its GAAP results. The non-GAAP measures provided that relate to the Company’s performance on an economic fuel cost basis include Operating expenses, non-GAAP excluding Fuel and oil expense; Operating expenses, non-GAAP excluding Fuel and oil expense and profitsharing; Operating income, non-GAAP; Other (gains) losses, net, non-GAAP; Income before income taxes, non-GAAP; Provision for income taxes, net, non-GAAP; Net income, non-GAAP; Net income per share, diluted, non-GAAP; and Operating expenses per ASM, non-GAAP, excluding Fuel and oil expense and profitsharing (cents). The Company's economic Fuel and oil expense results differ from GAAP results in that they only include the actual cash settlements from fuel hedge contracts - all reflected within Fuel and oil expense in the period of settlement. Thus, Fuel and oil expense on an economic basis has historically been utilized by the Company, as well as some of the other airlines that utilize fuel hedging, as it reflects the Company’s actual net cash outlays for fuel during the applicable period, inclusive of settled fuel derivative contracts. Any net premium costs paid related to option contracts that are designated as hedges are reflected as a component of Fuel and oil expense, for both GAAP and non-GAAP (including economic) purposes in the period of contract settlement. The Company believes these economic results provide further insight into the impact of the Company's fuel hedges on its operating performance and liquidity since they exclude the unrealized, noncash adjustments and reclassifications that are recorded in GAAP results in accordance with accounting guidance relating to derivative instruments, and they reflect all cash settlements related to fuel derivative contracts within Fuel and oil expense. This enables the Company's management, as well as investors and analysts, to consistently assess the Company's operating performance on a year-over-year or quarter-over-quarter basis after considering all efforts in place to manage fuel expense. However, because these measures are not determined in accordance with GAAP, such measures are susceptible to varying calculations, and not all companies calculate the measures in the same manner. As a result, the aforementioned measures, as presented, may not be directly comparable to similarly titled measures presented by other companies.
Further information on (i) the Company's fuel hedging program, (ii) the requirements of accounting for derivative instruments, and (iii) the causes of hedge ineffectiveness and/or mark-to-market gains or losses from derivative instruments is included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The Company’s GAAP results in the applicable periods may include other charges or benefits that are also deemed "special items," that the Company believes make its results difficult to compare to prior periods, anticipated future periods, or industry trends. Financial measures identified as non-GAAP (or as excluding special items) have been adjusted to exclude special items. For the periods presented, in addition to the items discussed above, special items include:
1.Incremental expense associated with contract ratification bonuses for various workgroups related to additional compensation for services performed by Employees outside the applicable fiscal period;
2.Charges associated with tentative litigation settlements regarding certain California state meal-and-rest-break regulations for flight attendants and an arbitration award in favor of the Company's Pilots relating to a collective-bargaining matter;
3.Expenses associated with incremental professional advisory fees related to activist investor activities, which were not budgeted by the Company, are not associated with the ongoing operation of the airline, and are difficult to predict in future periods;
4.Unrealized mark-to-market adjustment associated with certain available for sale securities; and
5.A charge associated with a settlement reached with the Department of Transportation as a result of the Company's December 2022 operational disruption.
Because management believes special items can distort the trends associated with the Company’s ongoing performance as an airline, the Company believes that evaluation of its financial performance can be enhanced by a supplemental presentation of results that exclude the impact of special items in order to enhance consistency and comparativeness with results in prior periods that do not include such items and as a basis for evaluating operating results in future periods. The following measures are often provided, excluding special items, and utilized by the Company’s management, analysts, and investors to enhance comparability of year-over-year results, as well as to industry trends: Operating expenses, non-GAAP excluding Fuel and oil expense; Operating expenses, non-GAAP excluding Fuel and oil expense and profitsharing; Operating income, non-GAAP; Other (gains) losses, net, non-GAAP; Income before income taxes, non-GAAP; Provision for income taxes, net, non-GAAP; Net income, non-GAAP; Net income per share, diluted, non-GAAP; and Operating expenses per ASM, non-GAAP, excluding Fuel and oil expense and profitsharing (cents).
The Company has also provided its calculation of return on invested capital, which is a measure of financial performance used by management to evaluate its investment returns on capital. Return on invested capital is not a substitute for financial results as reported in accordance with GAAP and should not be utilized in place of such GAAP results. Although return on invested capital is not a measure defined by GAAP, it is calculated by the Company, in part, using non-GAAP financial measures. Those non-GAAP financial measures are utilized for the same reasons as those noted above for Net income, non-GAAP and Operating income, non-GAAP. The comparable GAAP measures include charges or benefits that are deemed "special items" that the Company believes make its results difficult to compare to prior periods, anticipated future periods, or industry trends, and the Company’s profitability targets and estimates, both internally and externally, are based on non-GAAP results since "special items" cannot be reliably predicted or estimated. The Company believes non-GAAP return on invested capital is a meaningful measure because it quantifies the Company's effectiveness in generating returns relative to the capital it has invested in its business. Although return on invested capital is commonly used as a measure of capital efficiency, definitions of return on invested capital differ; therefore, the Company is providing an explanation of its calculation for non-GAAP return on invested capital in the accompanying reconciliation in order to allow investors to compare and contrast its calculation to the calculations provided by other companies.
The Company has also provided adjusted debt, invested capital, and adjusted debt to invested capital (leverage), which are non-GAAP measures of financial performance. Management believes these supplemental measures can provide a more accurate view of the Company's leverage and risk, since they consider the Company’s debt and debt-like obligation profile and capital. Leverage ratios are widely used by investors, analysts, and rating agencies in the valuation, comparison, rating, and investment recommendations of companies. Although adjusted debt, invested capital, and leverage ratios are commonly-used financial measures, definitions of each differ; therefore, the Company is providing an explanation of its calculations for non-GAAP adjusted debt and adjusted equity in the accompanying reconciliation below in order to allow investors to compare and contrast its calculations to the calculations provided by other companies. Invested capital is adjusted debt plus adjusted equity. Leverage is calculated as adjusted debt divided by invested capital.
| September 30, 2024 | |||||
| (in millions) | |||||
| Current maturities of long-term debt, as reported | $ | 2,930 | |||
| Long-term debt less current maturities, as reported | 5,075 | ||||
| Total debt | 8,005 | ||||
| Add: Net present value of aircraft rentals | 833 | ||||
| Adjusted debt (A) | $ | 8,838 | |||
| Total stockholders' equity, as reported | $ | 10,411 | |||
| Deduct: Accumulated other comprehensive income, as reported | (37) | ||||
| Deduct: Cumulative retained earnings impact of unrealized gains (losses) associated with ineffective fuel hedge derivatives | (24) | ||||
| Adjusted equity (B) | $ | 10,472 | |||
| Invested capital (A+B) | $ | 19,310 | |||
| Leverage: Adjusted debt to invested capital (A/(A+B)) | 46 | % | |||