LUV Q4 2021 Earnings

Call Details

• Call Title: Southwest Airlines Q4 2021 Earnings Call
• Date: January 27, 2022 at 5:30 PM UTC
• Management Team:
  • Ryan Martinez (Vice President of Investor Relations)
  • Gary Kelly (Chairman of the Board and CEO)
  • Bob Jordan (Executive Vice President and incoming CEO)
  • Tammy Romo (Executive Vice President and CFO)
  • Andrew Watterson (Executive Vice President and Chief Commercial Officer)
  • Mike Vanderman (President and Chief Operating Officer)

Call Summary

Financial Performance

• Southwest reported a GAAP Q4 2021 net income of $68M or $0.11 per diluted share.
• Excluding special items, Q4 2021 adjusted net income was $85M or $0.14 per diluted share.
• Full year 2021 GAAP net income was $977M or $1.61 per diluted share, driven by $2.7B of payroll support proceeds.
• Full year 2021 excluding temporary government benefits and special items produced a net loss of $1.3B or $2.15 per diluted share.
• Operating revenues in Q4 finished down 11.8% versus 2019 on a comparable basis.
• Other revenues in Q4 2021 increased about 20% versus Q4 2019, reflecting early benefits from the new Chase co-brand agreement.

Guidance

• First quarter 2022 offering revenue guidance is down 10% to 15% versus Q1 2019.
• Company expects a profit in March 2022 and anticipates profitability for the remaining quarters and full year 2022 based on current plans.
• First quarter 2022 capacity was revised down three points (from down 6% to down 9% versus Q1 2019) due to staffing and cancellations, with full year 2022 capacity revised to down 4% versus 2019.
• Company estimates Omicron-related negative revenue impact for January and February combined of roughly $330M.
• First quarter estimated fuel price guidance is $2.25 to $2.35 per gallon and includes an estimated $0.35/gal of hedging gains.
• Company reiterated that 2023 CASM-ex-fuel (CASMX) is expected to decline year-over-year compared with 2022 and that Q1 2022 is a peak for CASMX in the near term.