Southwest Airlines Co. (LUV)

In the past six months, Southwest Airlines reported a surprise profit for Q3 2025, with adjusted earnings of $0.11 per share, exceeding expectations, and record revenue of $6.9 billion, driving shares up 3.6%. The company returned $439 million to shareholders through dividends and share repurchases. Southwest announced a $1.5 billion senior notes offering for general corporate purposes and a $2.00 billion share repurchase program. A quarterly dividend of $0.18 per share was announced and paid on September 24, 2025. Analyst sentiment is cautious, with a consensus rating of "Reduce" and an average 12-month price target of $33.3750. There was insider buying activity in August.

Demand for Southwest Airlines' services is seasonal, with strong travel demand during holiday seasons. The airline experienced better-than-expected bookings during the holiday season in late 2024, and a positive trend in demand began in early July 2025, continuing through the third quarter. Corporate travel also improved. Southwest anticipates continued strong demand into Q1 2025, with unit revenues projected to increase. The company expects fourth-quarter 2025 unit revenues to be up 1% to 3% year-over-year, assuming demand remains strong. The airline industry is expected to see air travel growth in 2025, but there are concerns over unmet travel demand and cyclical declines in discretionary spending.

Southwest Airlines Co. (LUV), founded in 1967 and headquartered in Dallas, Texas, operates as a low-cost carrier within the Industrials sector, focusing on point-to-point service. Its primary business is scheduled air transportation, mainly in the United States and select international locations. Core airline ticket sales account for approximately 92.5% of its revenue, supplemented by ancillary services like the Rapid Rewards program, Business Select Fares, EarlyBird Check-In, Upgraded Boarding, and fees for pet transportation and unaccompanied minors. The airline is known for customer-friendly policies such as free checked bags and no change fees, and it operates primarily Boeing 737 aircraft.

Southwest Airlines serves 117 airports in 11 countries, with over 95% of its revenue coming from the United States. It also provides service to destinations in Puerto Rico, Mexico, Central America, and the Caribbean, including Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. Southwest expanded to Puerto Rico in 2013, began international flights in 2014, and started serving the Hawaiian Islands in 2019.

Southwest Airlines has a strong brand reputation for affordable and reliable air travel, fostering a loyal customer base. The company is recognized for customer-centric policies, including free checked bags and no change fees. Southwest has launched initiatives to enhance customer experience, such as selling assigned and extra legroom seating and offering free Wi-Fi for Rapid Rewards members. However, the airline faced operational issues in December 2022, leading to a $140 million fine and exposing technology issues. In October 2025, Southwest faced flight delays due to a federal shutdown and potential disruptions from an Amazon Web Services outage. The decision to discontinue its fuel hedging program has exposed it to fuel price volatility.

Institutional investors and hedge funds own 80.82% of Southwest Airlines Co. (LUV) stock, with mutual funds owning 36.45% and other institutional investors holding 0.24%. Public companies and individual investors account for 27.29% of the ownership, while insiders own 0.79% of the stock. Elliott Management L.P. holds a significant 14.8% stake.