LUV Q1 2023 Earnings

Call Details

• Call Title: Southwest Airlines Company Q1 2023 Earnings Call
• Date: April 27, 2023 at 4:30 PM UTC
• Management Team:
  • Ryan Martinez (Vice President of Investor Relations)
  • Bob Jordan (President and CEO)
  • Tammy Romo (Executive Vice President and CFO)
  • Ryan Green (Executive Vice President and Chief Commercial Officer)
  • Andrew Watterson (Chief Operating Officer)
  • Linda Rutherford (Chief Administration and Communications Officer)

Call Summary

Financial Performance

• Southwest reported record first-quarter operating revenues of $5.7B.
• First quarter revenue growth was 21.6% year over year.
• The company incurred a first quarter net loss driven by a $380M pre-tax negative financial impact related to the December operational disruption.
• Approximately $325M of the disruption impact was from lower revenue in January and February tied to canceled holiday return trips.
• First quarter RASM was a record 15 cents.
• First-quarter CASM-X increased 5.9% year over year.
• The company ended Q1 with 793 aircraft after 30 deliveries and retirements that were two more than previously planned.

Guidance

• Second quarter RASM guidance is down 8% to 11% year over year and contains a 4.5 point headwind related to approximately $300M of breakage revenue in 2Q22.
• Adjusted for the breakage headwind, second quarter RASM would be down around 5% year over year.
• Second quarter CASM-X is estimated to increase in the 5% to 8% year-over-year range.
• Full year 2023 CASM-X is now estimated to decrease 2% to 4% year over year, revised from prior guidance of down 3.5% to 5.5%.
• Full year capacity guidance was lowered to up 14% to 15% year over year, with second quarter capacity still expected to be up 14% year over year.
• Company now plans around 70-8 aircraft deliveries in 2023 versus a prior planning assumption of approximately 90-8 deliveries, which drove the capacity and CapEx revisions.
• The company expects solid profitability in Q2 and solid full-year profitability with a goal to grow full-year margins and ROIC year over year.