LUV Q2 2024 Earnings

Call Details

• Call Title: Southwest Airlines Company Q2 2024 Earnings Call
• Date: July 25, 2024 at 4:30 PM UTC
• Management Team:
  • Gary Kelly (Chief Executive Officer)
  • Julia Landrum (Vice President of Investor Relations)
  • Bob Jordan (President and CEO)
  • Andrew Watterson (Chief Operating Officer)
  • Tammy Romo (Executive Vice President and CFO)
  • Ryan Green (EVP of Commercial Transformation)
  • Whitney Eichinger (Chief Communications Officer)

Call Summary

Financial Performance

• Second quarter unit revenue declined 3.8% year over year.
• Second quarter CASM-X increased 6% year over year.
• Second quarter average jet fuel price was $2.76 per gallon.
• The company ended second quarter with $10.0B of cash and short-term investments and $8.0B of outstanding debt, leaving a net cash position.
• The company returned $215M to shareholders through dividends in the first half of 2024 and paid an additional dividend in early Q3.
• Expected capital spending for 2024 is approximately $2.5B.
• Full year 2024 capacity is expected to be up approximately 4% year over year.
• Third quarter RASM outlook is flat to down 2% year over year with an expectation that RASM growth will be positive by fourth quarter.

Guidance

• Company expects third quarter capacity to increase approximately 2% year over year.
• Company expects fourth quarter capacity to decrease approximately 4% year over year.
• Company expects full year CASM-X growth of 7% to 8% year over year.
• Company plans to maintain a roughly 50% target hedge position for fuel and will opportunistically add protection.
• The estimated two-point year-over-year headwind to third quarter revenue from existing bookings tied to the new RM system is already built into Q3 guidance.
• Company expects 2024 interest income to more than offset 2024 interest expense.
• The company intends to normalize liquidity toward pre-COVID levels and target a minimum total liquidity position including the undrawn revolver.