Southwest Airlines Co. (LUV)

Over the past six months, Southwest Airlines' stock has experienced notable events. In the fourth quarter of 2024, earnings beat estimates, while revenue missed, with a net income of $261 million. In the first quarter of 2025, the reported EPS was -$0.13, beating the consensus estimate of -$0.18. JP Morgan downgraded Southwest Airlines from Neutral to Underweight on March 3, 2025. UBS upgraded Southwest Airlines from Sell to Neutral and Melius Research upgraded Southwest Airlines from Sell to Hold on March 20, 2025. Jefferies upgraded Southwest Airlines from Underperform to Hold on May 27, 2025. In October 2023, Southwest announced plans to moderate capacity growth in 2024. On December 6, 2022, the board of directors reinstated its quarterly cash dividend at 18 cents per share. As of June 27, 2025, the share price was $32.16, an increase of 2.45% from the prior week, with a -3.74% change over the past six months.

Demand for air travel for Southwest Airlines is typically greater during the summer months, resulting in stronger revenues in the second and third quarters. Southwest also offers seasonal nonstop services, particularly for spring break travel. The U.S. airline industry experienced a strong recovery in domestic leisure travel demand since mid-2022, with international travel demand largely recovering to pre-pandemic levels by summer 2023. Business travel remained at reduced levels throughout 2022 and 2023 compared to pre-pandemic levels. Southwest anticipated continued strong travel demand into the first quarter of 2025.

Southwest Airlines Co. is a major American passenger airline providing scheduled air transportation services primarily within the United States and to near-international markets. Headquartered in Dallas, Texas, it is recognized as one of the largest low-cost carriers globally. Southwest's core business strategy revolves around offering low-cost, high-frequency, point-to-point air travel. The company is known for its customer-friendly policies, including free checked bags and no change or cancel fees, though changes to fare products and associated benefits are being introduced in 2025. Southwest primarily operates a single aircraft type, the Boeing 737, for operational efficiency and cost discipline. Major products and services include scheduled air transportation, fare products, the Rapid Rewards Loyalty Program, inflight entertainment and connectivity, digital platforms, ancillary services, and cargo transportation.

As of December 31, 2023, Southwest Airlines served 121 destinations across 42 states, the District of Columbia, and the Commonwealth of Puerto Rico. The company also serves ten near-international countries: Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. Southwest has expanded its network to new customer bases and geographic regions, including entering 18 new destinations in 2020 and 2021. The airline utilizes a point-to-point system combined with a rolling-hub model in its base cities.

Southwest Airlines has maintained a strong brand reputation, ranking as the #1 Airline for Economy Class Customer Satisfaction in the J.D. Power 2024 North America Airline Satisfaction Study for the third consecutive year. Southwest was also ranked No. 1 on Newsweek's 2024 America's Best Customer Service List and named to Newsweek's America's Most Responsible Companies list. The company was recognized by USA TODAY as one of America's 2024 Customer Service Champions and named Domestic Carrier of the Year by the Airforwarders Association. A significant event that impacted Southwest's reputation in late 2022 was a holiday meltdown where over 15,000 flights were canceled. Discussions around potential changes to their customer-friendly policies could influence future brand perception.

Southwest Airlines Co. is primarily owned by institutional shareholders, including Vanguard Group Inc., Elliott Investment Management L.P., Primecap Management Co/ca/, State Street Corp, BlackRock, Inc., Franklin Resources Inc, Price T Rowe Associates Inc /md/, and UBS Group AG. The largest individual shareholder is Berkshire Hathaway Inc., owning 18.42% of the company.