- Southwest Airlines (LUV, Financial) reports Q1 2025 net loss of $149 million despite record revenues.
- The company maintains strong liquidity with $9.3 billion compared to $6.7 billion in debt.
- Southwest announces new business strategies including basic economy fares and bag fees to boost revenue.
In the first quarter of 2025, Southwest Airlines (LUV) reported a net loss of $149 million, equating to a $0.26 loss per diluted share. Excluding special items, the net loss was $77 million. Despite the loss, the airline achieved a record first quarter operating revenue of $6.4 billion, buoyed by all-time record yields.
Southwest maintains a strong liquidity position of $9.3 billion while holding $6.7 billion in debt, reflecting a net cash position of $1.6 billion. This financial strength enables continued shareholder returns, with $857 million returned via dividends and share repurchases in Q1.
In response to weakened demand in its core domestic leisure market, where the airline is heavily exposed, Southwest is reducing its full-year 2025 capacity growth expectation to 1% year-over-year.
Southwest Airlines is undergoing significant business model changes, including the introduction of basic economy fares, bag fees, and assigned seating, deviating from its traditional practices. The company plans to complete a $2.5 billion share buyback program by July 2025, with $1.0 billion already repurchased.
Looking forward, Southwest targets a $1.8 billion incremental EBIT contribution for 2025 and $4.3 billion for 2026 from its strategic initiatives, despite macroeconomic uncertainties. The company continues to focus on operational improvements, including expanding distribution through Expedia and optimizing loyalty programs.
