Southwest Airlines Co. (LUV) is scheduled to report first-quarter 2025 results on April 24, 2025.
LUV has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters, missed the mark in the remaining quarter, the average beat being 58.64%. (See the Zacks Earnings Calendar to stay ahead of market-making news).
Image Source: Zacks Investment Research
Let’s see how things have shaped up for LUV this earnings season.
The Zacks Consensus Estimate for Southwest Airlines Airlines’ first-quarter 2025 revenues is pegged at $6.40 billion, indicating 1.16% growth year over year. The uptick is likely owing to LUV’s revenue management actions, which are likely to have boosted revenue growth and expanded the customer base by retaining existing customers and attracting new ones. LUV continues to work on its revenue management actions, which include network optimization and capacity moderation, as well as marketing and distribution evolution. LUV remains focused on boosting efficiencies to offset overall inflationary cost pressures and achieve its cost initiative.
Low fuel costs due to the downtrend in oil prices are likely to have boosted the bottom-line performance in the to-be-reported quarter. The decline in oil prices bodes well for LUV’s bottom-line growth because fuel expenses are a significant input cost for the airline space. Economic fuel cost per gallon for the first quarter is now expected to be in the range of $2.35 to $2.45 (prior view: $2.50 to $2.60).
The Zacks Consensus Estimate for first-quarter 2025 loss is currently pegged at 18 cents per share, wider than the loss of 16 cents in the past 60 days. However, the consensus mark implies a 50% northward movement from the year-ago actual.
Image Source: Zacks Investment Research
We expect tariff-induced economic uncertainties and the resultant reduction in consumer and corporate confidence to have caused a slowdown in domestic air travel demand. Higher-than-expected completion factor, lesser government travel, and a higher-than-expected impact from the California wildfires have acted as other headwinds too. Labor costs are also likely to have been high, hurting bottom-line performance in the March quarter.
Our proven model does not conclusively predict an earnings beat for Southwest Airlines this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
