Southwest Airlines Reports Record $27.5 Billion Revenue for 2024

Southwest Airlines Co. reported record full-year 2024 operating revenues of $27.5 billion, exceeding its 2023 performance. This increase is attributed to sustained travel demand and successful implementation of initiatives aimed at enhancing customer experience and financial performance. The company also reported record ancillary revenue and passenger counts for the year. Southwest returned $680 million to shareholders through dividends and an accelerated share repurchase program, repurchasing 7.8 million shares at an average price of $32.02. The company has $2.25 billion remaining under its current share repurchase authorization and announced plans for an additional $750 million accelerated share repurchase program in the first quarter of 2025.

Compared to 2023, Southwest's 2024 GAAP operating income increased by 43.3% to $321 million, while net income remained unchanged at $465 million. Non-GAAP operating income, however, decreased by 48.8% to $457 million, and non-GAAP net income decreased by 39.1% to $597 million. These discrepancies are largely due to higher salaries, wages, and benefits expense, partially offset by lower fuel and oil expenses resulting from lower jet fuel prices. The GAAP figures also include a $116 million reversal of breakage revenue from prior years related to flight credits, while 2023 figures included $534 million in special items related to labor contract ratification bonuses and a DOT settlement.

Significant strategic developments in 2024 included the announcement of several transformational initiatives. These initiatives aim to modernize the customer experience and improve financial performance, and include the introduction of assigned seating and premium seating options, a redesigned boarding model, and the expansion of the company's network through global airline partnerships, beginning with Icelandair in February 2025. Additionally, Southwest plans to launch a new vacation package product, "Getaways by Southwest," in 2025, and is enhancing its Rapid Rewards loyalty program. The company also implemented several cost-saving measures, including a reduction in active full-time equivalent employees by 3.1% to 72,450.

Operationally, Southwest carried 140.0 million revenue passengers in 2024, a 2% increase compared to 2023. Revenue passenger miles increased by 4.6% to 142,515 million, while available seat miles increased by 4.1% to 177,250 million, resulting in a load factor of 80.4%. The average passenger fare increased by 3.6% to $178.40. The company also improved its fuel efficiency, achieving 80.8 available seat miles per fuel gallon consumed in 2024, compared to 79.5 in 2023. The company's average fuel cost, including fuel taxes and hedging impacts, decreased by 8.7% to $2.64 per gallon.

Looking ahead, Southwest projects a 5% to 7% year-over-year increase in RASM for the first quarter of 2025, but anticipates a 2% to 3% decrease in ASMs. The company forecasts a 7% to 9% year-over-year increase in CASM-X for the first quarter, driven by inflationary pressures and capacity moderation. For the full year 2025, Southwest targets an operating margin (excluding special items) of 3% to 5%, and a return on invested capital of 5% to 8%. Longer-term targets for 2027 include an operating margin of at least 10%, a return on invested capital of at least 15%, and free cash flow exceeding $1 billion. The company also notes several risk factors, including economic conditions, fuel price volatility, labor costs, competition, and regulatory changes, that could impact its future performance.