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SOUTHWEST AIRLINES REPORTS FIRST QUARTER 2024 RESULTS
Southwest Airlines ist eine amerikanische Billigflug-Gesellschaft.
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PR Newswire
DALLAS, April 25, 2024
DALLAS, April 25, 2024 /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) (the "Company") today reported its first quarter 2024 financial results:
- Net loss of $231 million, or $0.39 loss per diluted share
- Net loss, excluding special items1, of $218 million, or $0.36 loss per diluted share
- Record first quarter operating revenues of $6.3 billion
- Liquidity2 of $11.5 billion, well in excess of debt outstanding of $8.0 billion
Bob Jordan, President and Chief Executive Officer, stated, "While it is disappointing to incur a first quarter loss, we exited the quarter with healthy profits and margins in the month of March. We are focused on controlling what we can control and have already taken swift action to address our financial underperformance and adjust for revised aircraft delivery expectations. I want to thank our more than 74,000 Employees for their continued Warrior Spirit to maintain a reliable and resilient operation as we adapt to aircraft delivery constraints and adjust to slower than planned growth for this year and next.
"Our first quarter 2024 revenue performance, while shy of our prior aspirations, resulted in record first quarter operating revenues, record first quarter passengers carried, and a solid sequential improvement in nominal unit revenue when compared with seasonal norms. The sequential improvement was driven by an acceleration in managed business revenues as well as benefits from network adjustments, which started in earnest with the March schedule. While costs remain a headwind, we are realizing benefits from our ongoing cost reduction actions and remain focused on enhancing productivity and controlling discretionary spending. We also have certainty with labor rates, having ratified agreements with 11 of our labor groups in the past 18 months, including the agreement ratified yesterday for our Flight Attendants.
"Achieving our financial goals is an immediate imperative. The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025. We are reacting and replanning quickly to mitigate the operational and financial impacts while maintaining dependable and reliable flight schedules for our Customers.
"To improve our financial performance, we have intensified our network optimization efforts to address underperforming markets. Consequently, we have made the difficult decision to close our operations at Bellingham International Airport, Cozumel International Airport, Houston's George Bush Intercontinental Airport, and Syracuse Hancock International Airport. I want to sincerely thank our Employees, the airports, and the communities for all their incredible support over the years.
"Additionally, we are evaluating options to enhance our Customer Experience as we study product preferences and expectations, including onboard seating and our cabin. And, we are implementing cost control initiatives, including limiting hiring and offering voluntary time off programs. We now expect to end 2024 with approximately 2,000 fewer Employees as compared with the end of 2023.
"We are focused on achieving our financial prosperity goals and creating value for our Shareholders, while we adjust to changes in our aircraft delivery plans, Customer travel patterns and preferences, higher fuel prices, and other cost pressures. We are excited and optimistic with a robust set of strategic initiatives that are well underway. They are comprehensive and aimed at enhancing the Customer Experience; delivering operational excellence; creating new and meaningful revenue opportunities; expanding margins; and achieving return on invested capital well above of our weighted average cost of capital. We look forward to sharing these plans at our Investor Day in September."
Guidance and Outlook:
The following tables introduce or update selected financial guidance for second quarter and full year 2024, as applicable:
| | | | | | | | | | | | | | 2Q 2024 Estimation | | | | | | | | | | | | |||||
| RASM (a), year-over-year | | | | | | | | | | | | | Down 1.5% to 3.5% | | | | | | | | | | | | |||||
| ASMs (b), year-over-year | | | | | | | | | | | | | Up 8% to 9% | | | | | | | | | | | | |||||
| Economic fuel costs per gallon1,3 | | | | | | | | | | | | | $2.70 to $2.80 | | | | | | | | | | | | |||||
| Fuel hedging premium expense per gallon | | | | | | | | | | | | | $0.07 | | | | | | | | | | | | |||||
| Fuel hedging cash settlement gains per gallon | | | | | | | | | | | | | $0.04 | | | | | | | | | | | | |||||
| ASMs per gallon (fuel efficiency) | | | | | | | | | | | | | 80 to 81 | | | | | | | | | | | | |||||
| CASM-X (c), year-over-year1,4 | | | | | | | | | | | | | Up 6.5% to 7.5% | | | | | | | | | | | | |||||
| Scheduled debt repayments (millions) | | | | | | | | | | | | | ~$7 | | | | | | | | | | | | |||||
| Interest expense (millions) | | | | | | | | | | | | | ~$62 | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | |||||||||
| | | | | 2024 Estimation | | | | | | Previous estimation | | | |||||||||
| ASMs (b), year-over-year | | | | Up ~4% | | | | | | Up ~6% | | | |||||||||
| Economic fuel costs per gallon1,3 | | | | $2.70 to $2.80 | | | | | | $2.55 to $2.65 | | | |||||||||
| Fuel hedging premium expense per gallon | | | | $0.07 | | | | | | No change | | | |||||||||
| Fuel hedging cash settlement gains per gallon | | | | $0.04 | | | | | | $0.01 | | | |||||||||
| CASM-X (c), year-over-year1,4 | | | | Up 7% to 8% | | | | | | Up 5.5% to 7% | | | |||||||||
| Scheduled debt repayments (millions) | | | | ~$29 | | | | | | No change | | | |||||||||
| Interest expense (millions) | | | | ~$252 | | | | | | ~$249 | | | |||||||||
| Aircraft (d) | | | | 802 | | | | | | 814 | | | |||||||||
| Effective tax rate | | | | 24% to 25% | | | | | | 23% to 24% | | | |||||||||
| Capital spending (billions) | | | | ~$2.5 | | | | | | $3.5 to $4.0 | | | |||||||||
| |
| (a) Operating revenue per available seat mile ("RASM" or "unit revenues"). |
| (b) Available seat miles ("ASMs" or "capacity"). The Company's flight schedule is published for sale through March 5, 2025. The Company expects third quarter 2024 capacity to increase in the low-single digits and fourth quarter 2024 capacity to decrease in the low- to mid-single digits, resulting in capacity growth in the range of flat to down low-single digits in second half 2024, all on a year-over-year percentage basis. |
| (c) Operating expenses per available seat mile, excluding fuel and oil expense, special items, and profitsharing ("CASM-X"). |
| (d) Aircraft on property, end of period. The Company now plans for approximately 20 Boeing 737-8 ("-8") aircraft deliveries and 35 aircraft retirements in 2024, comprised of 31 Boeing 737-700s ("-700") and four Boeing 737-800s ("-800"). This is compared with its previous plan for approximately 46 -8 deliveries and 49 aircraft retirements. The delivery schedule for the Boeing 737-7 ("-7") is dependent on the Federal Aviation Administration ("FAA") issuing required certifications and approvals to The Boeing Company ("Boeing") and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and Boeing may continue to experience manufacturing challenges, so the Company offers no assurances that current estimations and timelines will be met. |
Revenue Results and Outlook:
- First quarter 2024 operating revenues were a first quarter record $6.3 billion, a 10.9 percent increase, year-over-year
- First quarter 2024 RASM was flat, year-over-year—at the low end of the Company's previous guidance range
The Company had record first quarter revenue performance driven by strong demand trends and record first quarter passenger and ancillary revenue, passengers carried, and new Rapid Rewards® Members. The Company's first quarter 2024 RASM came in at the low end of its expectations primarily due to lower-than-expected close-in leisure passenger volume, including lower-than-expected maturation of development markets. Still, nominal sequential RASM in first quarter 2024 was ahead of normal seasonal trends. First quarter 2024 managed business revenues strengthened sequentially, as expected, finishing roughly flat when compared with first quarter 2019 levels, and up approximately 25 percent, year-over-year. Network optimization adjustments, implemented with the March schedule, were accretive and supported the profitability inflection point and strong margins for the month of March 2024.
Based on current booking trends, the Company continues to expect an all-time quarterly record for operating revenue in second quarter 2024. Second quarter 2024 RASM is expected to decrease in the range of 1.5 percent to 3.5 percent, on capacity growth of 8 percent to 9 percent, both year-over-year. The comparison includes just over one point of year-over-year headwind from the combined impact of Easter and 4th of July timing. Once again, the Company currently expects nominal second quarter 2024 sequential RASM trends to exceed normal seasonal trends. This anticipated sequential improvement includes expected benefits from revenue initiatives—most notably a full quarter of network optimization.
Significant challenges presented by Boeing aircraft delivery delays, and the related reduction in second half 2024 capacity, negatively impact the Company's previous expectation for double-digit year-over-year operating revenue growth for full year 2024. As such, the Company now expects full year 2024 year-over-year operating revenue growth approaching high-single digits when adjusted for current trends and planned reductions for post-summer schedules. While the Company remains committed to the goal of earning its cost of capital, these new challenges, combined with current trend pressures, make it more realistic to expect that to occur beyond 2024. The Company is working on further optimization of its network with the goal to improve unit revenue performance and operating margins5. To that end, the Company has made the difficult decision to cease operations at Bellingham International Airport, Cozumel International Airport, Houston's George Bush Intercontinental Airport, and Syracuse Hancock International Airport on August 4, 2024, and significantly restructure other markets, most notably by implementing capacity reductions in both Hartsfield-Jackson Atlanta International Airport and Chicago O'Hare International Airport.
The Company's initiatives, which include the estimated benefit of network changes, are expected to contribute between $1.0 billion and $1.5 billion in 2024 year-over-year pre-tax profits, compared with its initial plan of roughly $1.5 billion. The estimated value has been updated for first quarter actual performance, development market adjustments, and capacity changes in the second half of the year. Furthermore, the Company will continue to evaluate its network and work on its robust set of new strategic initiatives, including revenue generating opportunities.
Fuel Costs and Outlook:
- First quarter 2024 economic fuel costs were $2.92 per gallon1—slightly below the Company's previous expectations primarily as a result of lower-than-expected refinery margins—and included $0.08 per gallon in premium expense and $0.04 per gallon in favorable cash settlements from fuel derivative contracts
- First quarter 2024 fuel efficiency improved 2.5 percent, year-over-year, primarily due to more -8 aircraft, the Company's most fuel-efficient aircraft, as a percentage of its fleet
- As of April 18, 2024, the fair market value of the Company's fuel derivative contracts settling in second quarter 2024 through the end of 2026 was an asset of $270 million
The Company's multi-year fuel hedging program continues to provide protection against spikes in energy prices. The Company's current fuel derivative contracts contain a combination of instruments based on West Texas Intermediate and Brent crude oil, and refined products, such as heating oil. The economic fuel price per gallon sensitivities3 provided in the table below assume the relationship between Brent crude oil and refined products based on market prices as of April 18, 2024.
| | | | | | |||||||
| | | Estimated economic fuel price per gallon, | | | |||||||
| | Average Brent Crude Oil | 2Q 2024 | 2024 | | | ||||||
| | $70 | $2.45 - $2.55 | $2.50 - $2.60 | | | ||||||
| | $80 | $2.65 - $2.75 | $2.70 - $2.80 | | | ||||||
| | Current Market (a) | $2.70 - $2.80 | $2.70 - $2.80 | | | ||||||
| | $90 | $2.80 - $2.90 | $2.85 - $2.95 | | | ||||||
| | $100 | $3.00 - $3.10 | $3.05 - $3.15 | | | ||||||
| | $110 | $3.10 - $3.20 | $3.15 - $3.25 | | | ||||||
| | | | | | | ||||||
| | Fair market value of | $27 million | $109 million | | | ||||||
| | Estimated premium costs | $39 million | $158 million Werbung Mehr Nachrichten zur Southwest Airlines Co Aktie kostenlos abonnieren
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