Southwest Reports Q1 Results, Predicts Profitability In Remaining Quarters Of FY22

  • Southwest Airlines Co LUV reported first-quarter FY22 operating revenue growth of 128.8% year-over-year to $4.69 billion, beating the consensus of $4.67 billion.
  • Operating revenue declined by 8.8% compared to 1Q19.
  • Adjusted EPS loss improved to $(0.32) compared to $(1.72) in 1Q21, missing the consensus of $(0.30).
  • The airline reported an adjusted operating loss of $(135) million, compared to a loss of $(1.27) billion a year ago. Total operating expenses excluding items increased by 34.9% Y/Y to $3.79 billion.
  • Southwest Airlines' cash provided by operating activities for Q1 was $1.07 billion, compared to $645 million a year ago.
  • The company ended Q1 with ~$15.7 billion in cash and equivalents and a fully available revolving credit line of $1 billion.
  • RASM increased 0.4%, driven primarily by a passenger yield increase of 1.1%, partially offset by a load factor decrease of 4.0 points compared to 1Q19.
  • Revenue passenger miles increased 78% Y/Y, Available seat miles were up 48.6% Y/Y, and load factor was 77% compared to 64.3% in 1Q21.
  • "Based on current plans and expected continued strong bookings, we continue to expect to be solidly profitable for the remaining three quarters of this year and for the full year 2022," commented CEO Bob Jordan.
  • Q2 Outlook (compared with 1Q19): Operating revenue to be up 8% - 12%, ASMs to be down ~7%, and Load factor of ~85%.
  • FY22 Outlook (compared with FY19): LUV expects Capacity to be down ~4%.
  • Price Action: LUV shares traded higher by 1.60% at $46.68 on the last check Thursday.
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