Southwest Airlines Co.: Q3 FY2025 earnings call

What management said about Q3 FY2025, from the documents filed with the SEC on 22 October 2025: press release. Guidance figures: 2 raised, 4 new, 5 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Net income was $54 million: Excluding special items, net income was $58 million, or $0.11 per diluted share, against $89 million a year earlier. Total operating revenues were $6.9 billion, up 1.1 percent. Source
• First place year-to-date in rankings: On management's own calculations, the company ranks first year-to-date in Wall Street Journal airline rankings, which it links to continued investment in operations. Source
• Unit revenue rose 0.4 percent: RASM was 15.25 cents on capacity up 0.8 percent, with the result described by management as above the midpoint of its previous guidance range. Source
• Demand improved from early July: Management said corporate travel improved sequentially from the second quarter. Source
• Assigned and extra legroom seating sale: The sale of assigned and extra legroom seating was launched, and management said initial bookings matched its expectations on volume and mix. Source
• Unit costs below guidance range: CASM-X rose 2.5 percent, below the guidance range. Management attributed the result to broad-based cost discipline across the organization. Source
• Shareholder returns in the quarter: Returns combined dividends with repurchases made under the $2.0 billion authorization. Source

“We continue to make substantial progress as we execute the most significant transformation in Southwest Airlines’ history.”

Bob Jordan, President, Chief Executive Officer, & Vice Chairman of the Board of Directors

Guidance

What changed from last quarter

• Guidance raised: Full-year 2025 capacity guidance moved from roughly 1 percent to roughly 1.5 percent growth. Source
• Guidance raised: Planned 2025 Boeing 737-8 deliveries rose from 47 to 53. Source
• New guidance: Fourth quarter 2025 estimates were issued for capacity, unit revenue, unit costs and fuel cost per gallon. Source
• Guidance kept: Full-year 2025 EBIT excluding special items was reaffirmed at $600 million to $800 million. Source
• Guidance kept: Initiative EBIT targets of about $1.8 billion for 2025 and about $4.3 billion for 2026 were kept. Source
• New: A partnership with EVA Air was announced to connect North America and Asia itineraries through shared gateways. Source
• New: Getaways by Southwest, an in-house packaged vacations product, was launched. Source

Results and operating performance

• Net income was $54 million: Excluding special items, net income was $58 million, or $0.11 per diluted share, against $89 million a year earlier. Total operating revenues were $6.9 billion, up 1.1 percent. Source
• Passenger revenue rose 1.0 percent: Passenger revenues reached $6.3 billion. Other revenue was $594 million, up 2.9 percent, and freight revenue was $42 million, down 2.3 percent. Source
• Operating income excluding special items rose: Operating income excluding special items was $42 million, up from $32 million. Reported operating income was $35 million, down 7.9 percent. Source
• First place year-to-date in rankings: On management's own calculations, the company ranks first year-to-date in Wall Street Journal airline rankings, which it links to continued investment in operations. Source

Unit revenue and demand

• Unit revenue rose 0.4 percent: RASM was 15.25 cents on capacity up 0.8 percent, with the result described by management as above the midpoint of its previous guidance range. Source
• Demand improved from early July: Management said corporate travel improved sequentially from the second quarter. Source
• Loyalty and co-brand card growth: Loyalty revenue was up 7 percent and new co-brand credit card acquisitions rose double digits, both measured year-over-year. Source
• Passengers carried declined: Revenue passengers carried fell 2.6 percent to about 34.6 million. Load factor was 79.8 percent, down 1.4 points. Source

“we delivered a profitable quarter, with both unit revenues and unit costs performing better-than-anticipated, are reaffirming our full year 2025 EBIT 2 guidance, and expect meaningful margin expansion in the fourth quarter.”

Bob Jordan, President, Chief Executive Officer, & Vice Chairman of the Board of Directors

Initiatives, products and partnerships

• Assigned and extra legroom seating sale: The sale of assigned and extra legroom seating was launched, and management said initial bookings matched its expectations on volume and mix. Source
• Free WiFi sponsored by T-Mobile: Free WiFi sponsored by T-Mobile was announced for all Rapid Rewards members, starting on the date given in the release. Source
• Wider online travel agency distribution: Distribution with online travel agencies was expanded, including a partnership with Priceline. Source
• EVA Air connecting itineraries: The EVA Air partnership will connect North America and Asia itineraries through shared gateways at Los Angeles, San Francisco, Seattle-Tacoma and Chicago. Source
• Initiative performance to ramp: Management said initiative performance will continue to ramp into the fourth quarter and into next year. Source

Costs, fuel and unit cost

• Unit costs below guidance range: CASM-X rose 2.5 percent, below the guidance range. Management attributed the result to broad-based cost discipline across the organization. Source
• Operating expenses rose 1.2 percent: Excluding fuel and oil, special items and profit sharing, operating expenses rose 3.4 percent in the quarter. Source
• Fuel cost per gallon was $2.40: Fuel costs including tax were $2.40 per gallon, down 4.8 percent from $2.52 a year earlier. Source
• Fuel efficiency improved 2.4 percent: Management attributed the fuel efficiency gain mainly to a larger share of the most fuel-efficient Boeing 737-8 aircraft in the fleet. Source
• Fuel and oil expense fell: Fuel and oil expense was $1.33 billion, down 6.1 percent, while fuel consumed fell 1.4 percent to 554 million gallons. Source

“We remain committed to meeting the evolving needs of our current and future Customers and delivering long-term value for our Shareholders.”

Bob Jordan, President, Chief Executive Officer, & Vice Chairman of the Board of Directors

Capacity, fleet and capital spending

• Capacity rose 0.8 percent: Capacity was up 0.8 percent, above the previous guide, reflecting retrofit timing and operational performance through the quarter. Source
• Fleet changes during the quarter: Eight -8 aircraft were received and 16 retired, including 15 -700 aircraft and one -800 sale. The fleet stood at 802 aircraft at quarter end. Source
• Extra legroom retrofits past 400: More than 400 aircraft have had extra legroom seating retrofits completed to date. Source
• Quarter capital spending of $678 million: Spending was mainly aircraft-related, and also included technology, facilities and operational investments. The year-earlier quarter was $517 million. Source

Liquidity, leverage and shareholder returns

• Cash and revolver liquidity: Cash and short-term investments stood at $3.0 billion at quarter end, with the revolving credit line fully available. Source
• Leverage inside target range: Leverage was 2.1 times adjusted debt to adjusted EBITDAR, which management placed inside its stated target range. Source
• Shareholder returns in the quarter: Returns combined dividends with repurchases made under the $2.0 billion authorization. Source
• Unencumbered aircraft asset base: Unencumbered aircraft and primarily aircraft-related assets carry a net book value that management put at about $16.8 billion. Source
• Buybacks to continue opportunistically: Management intends to keep repurchasing shares opportunistically, depending on market conditions. Source

Coming up, as management said on 22 October 2025

• Record fourth quarter revenue expected: Management expects all-time quarterly record operating revenues in the fourth quarter of 2025. Source
• Four -800 sales in fourth quarter: Four Boeing 737-800 aircraft sales are expected in the fourth quarter of 2025, following one in the third quarter. Source
• New service planned for 2026: Management announced its intention to start new service at Knoxville's McGhee Tyson Airport, with further airports named in the release, in 2026. Source

Figures management reported

Risks management discussed

• Demand: Fourth quarter unit revenue guidance assumes demand stays at current levels through the end of the quarter. Source
• Regulatory: Management cited the recent observed impact of the government shutdown as a factor in the fourth quarter guidance range. Source
• Financial: Management said unit costs continue to be driven primarily by inflationary pressures, including those tied to labor contracts ratified in 2024. Source
• Operational: Planned Boeing 737-8 deliveries were raised, and management tied the timing to Boeing's production ramp. Source

Earlier plans management reported on

• Ahead: Management said the quarter's results were ahead of its expectations, with unit revenues and unit costs better than anticipated. Source
• Met: The sale of assigned and extra legroom seating was launched, for travel from January 27, 2026. Source
• Not stated: Management said the January 27, 2026 operate date milestone for seating is still planned, supported by a streamlined technical timeline. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.