Southwest Airlines Co. (LUV - Free Report) reported fourth-quarter 2023 earnings per share of 37 cents, which outpaced the Zacks Consensus Estimate of 11 cents. In the year-ago quarter, LUV incurred a loss of 38 cents per share.
Revenues of $6,822 million outpaced the Zacks Consensus Estimate of $6,741.5 million and improved 10.5% year over year. The uptick was owing to healthy leisure demand and continued yield strength, mainly during the holiday time, coupled with record fourth-quarter ancillary revenues, loyalty program revenues, and passengers carried. Close-in bookings, including managed business bookings, performed at the better end of expectations in November and December 2023, driving fourth-quarter unit revenues to outperform the company's previous guidance range.
Operating Statistics
Airline traffic, measured in revenue passenger miles, increased 13.7% year over year to 35.58 billion in the quarter under review. Capacity or available seat miles (ASMs) climbed 21.4% year over year to 45.51 billion. Load factor (percentage of seats filled by passengers) fell to 78.2% from 83.5% in the year-ago quarter.The actual figure for the load factor was lower than our expectation of 83.3%.
Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) descended 7.6% year over year to 13.65 cents.The actual figure was lower than our estimate of 13.73 cents.
Revenue per available seat mile (RASM) fell 8.9% to 14.99 cents.The actual figure was higher than our estimate of 14.90 cents.
Operating Expenses & Income
In the fourth quarter, Southwest Airlines incurred an operating loss (as reported) of $361 million compared with a loss of $386 million in the year-ago quarter. On an adjusted basis (excluding special items), the company reported operating income of $177 million against the loss of $344 million in the year-ago quarter. Total adjusted operating expenses (excluding profit sharing, special items, fuel and oil expenses) decreased 0.7%.
Fuel cost per gallon (inclusive of fuel tax: economic) fell 5.7% to $3.00. The actual figure was higher than our estimate of $2.90.
Consolidated unit cost or cost per available seat mile (CASM) excluding fuel, oil and profit-sharing expenses, and special items fell 18.1% year over year.
Liquidity
Southwest Airlines ended the fourth quarter with cash and cash equivalents of $9,288 million compared with $9,497 million at the end of September 2023. As of Dec 31, 2023, the company had long-term debt (less current maturities) of $7,978 million compared with $7,984 million at the end of September 2023.
LUV generated $425 million of cash from operating activities in the reported quarter, while CapEx was $707 million.
Q1 & Full-Year Outlook
For the first quarter of 2024, ASMs are estimated to improve 10% from the year-ago reported figure. Economic fuel costs per gallonare expected to be between $2.70 and $2.80. RASM is anticipated to improve 2.5-4.5% from the year-ago reported figure. LUV expects CASM, excluding fuel, oil and profit-sharing expenses, and special items, to increase 6-7% in the first quarter from the comparable period in 2022. Interest expenses are expected to be $62 million in the first quarter.
For 2024, Southwest Airlines expects capacity to improve 6% from the 2023 level. Economic fuel costs per gallon are estimated to be between $2.55 and $2.65. CASM, excluding fuel, oil and profit-sharing expenses, and special items, is still anticipated to increase in the range of 6-7% in 2024 from 2023. Interest expenses are expected to be $249 million in 2024. The effective tax rate is still expected to be 23-24% in the year. Capital expenditures are anticipated to be in the range of $3.5-$4 billion for 2024.
Currently, Southwest Airlines carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) fourth-quarter 2023 earnings of $1.47 per share missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.
JBHT’s total operating revenues of $3,303.70 million surpassed the Zacks Consensus Estimate of $3,236.2 million but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenue, fell 6% year over year.
Delta Air Lines (DAL - Free Report) has reported fourth-quarter 2023 earnings (excluding $1.88 from non-recurring items) of $1.28 per share, which comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.51% on a year-over-year basis due to high labor costs.
Revenues of $14,223 million surpassed the Zacks Consensus Estimate of $14,069.5 million and increased 5.87% on a year-over-year basis, driven by strong holiday-air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $13,661 million, up 11% year over year.
United Airlines Holdings, Inc. (UAL - Free Report) reported fourth-quarter 2023 earnings per share (excluding 19 cents from non-recurring items) of $2.00, which outpaced the Zacks Consensus Estimate of $1.61 but declined 18.7% year over year.
Operating revenues of $13,626 million beat the Zacks Consensus Estimate of $13,546.8 million. The top line increased 9.9% year over year due to upbeat air-travel demand. This was driven by a 10.9% rise in passenger revenues (accounting for 91.1% of the top line) to $12,421 million. Almost 41,779 passengers traveled on UAL flights in the fourth quarter.
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Southwest Airlines Co. (LUV - Free Report) reported fourth-quarter 2023 earnings per share of 37 cents, which outpaced the Zacks Consensus Estimate of 11 cents. In the year-ago quarter, LUV incurred a loss of 38 cents per share.
Revenues of $6,822 million outpaced the Zacks Consensus Estimate of $6,741.5 million and improved 10.5% year over year. The uptick was owing to healthy leisure demand and continued yield strength, mainly during the holiday time, coupled with record fourth-quarter ancillary revenues, loyalty program revenues, and passengers carried. Close-in bookings, including managed business bookings, performed at the better end of expectations in November and December 2023, driving fourth-quarter unit revenues to outperform the company's previous guidance range.
Operating Statistics
Airline traffic, measured in revenue passenger miles, increased 13.7% year over year to 35.58 billion in the quarter under review. Capacity or available seat miles (ASMs) climbed 21.4% year over year to 45.51 billion. Load factor (percentage of seats filled by passengers) fell to 78.2% from 83.5% in the year-ago quarter.The actual figure for the load factor was lower than our expectation of 83.3%.
Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) descended 7.6% year over year to 13.65 cents.The actual figure was lower than our estimate of 13.73 cents.
Revenue per available seat mile (RASM) fell 8.9% to 14.99 cents.The actual figure was higher than our estimate of 14.90 cents.
Operating Expenses & Income
In the fourth quarter, Southwest Airlines incurred an operating loss (as reported) of $361 million compared with a loss of $386 million in the year-ago quarter. On an adjusted basis (excluding special items), the company reported operating income of $177 million against the loss of $344 million in the year-ago quarter. Total adjusted operating expenses (excluding profit sharing, special items, fuel and oil expenses) decreased 0.7%.
Fuel cost per gallon (inclusive of fuel tax: economic) fell 5.7% to $3.00. The actual figure was higher than our estimate of $2.90.
Consolidated unit cost or cost per available seat mile (CASM) excluding fuel, oil and profit-sharing expenses, and special items fell 18.1% year over year.
Liquidity
Southwest Airlines ended the fourth quarter with cash and cash equivalents of $9,288 million compared with $9,497 million at the end of September 2023. As of Dec 31, 2023, the company had long-term debt (less current maturities) of $7,978 million compared with $7,984 million at the end of September 2023.
LUV generated $425 million of cash from operating activities in the reported quarter, while CapEx was $707 million.
Q1 & Full-Year Outlook
For the first quarter of 2024, ASMs are estimated to improve 10% from the year-ago reported figure. Economic fuel costs per gallonare expected to be between $2.70 and $2.80. RASM is anticipated to improve 2.5-4.5% from the year-ago reported figure. LUV expects CASM, excluding fuel, oil and profit-sharing expenses, and special items, to increase 6-7% in the first quarter from the comparable period in 2022. Interest expenses are expected to be $62 million in the first quarter.
For 2024, Southwest Airlines expects capacity to improve 6% from the 2023 level. Economic fuel costs per gallon are estimated to be between $2.55 and $2.65. CASM, excluding fuel, oil and profit-sharing expenses, and special items, is still anticipated to increase in the range of 6-7% in 2024 from 2023. Interest expenses are expected to be $249 million in 2024. The effective tax rate is still expected to be 23-24% in the year. Capital expenditures are anticipated to be in the range of $3.5-$4 billion for 2024.
Currently, Southwest Airlines carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) fourth-quarter 2023 earnings of $1.47 per share missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.
JBHT’s total operating revenues of $3,303.70 million surpassed the Zacks Consensus Estimate of $3,236.2 million but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenue, fell 6% year over year.
Delta Air Lines (DAL - Free Report) has reported fourth-quarter 2023 earnings (excluding $1.88 from non-recurring items) of $1.28 per share, which comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.51% on a year-over-year basis due to high labor costs.
Revenues of $14,223 million surpassed the Zacks Consensus Estimate of $14,069.5 million and increased 5.87% on a year-over-year basis, driven by strong holiday-air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $13,661 million, up 11% year over year.
United Airlines Holdings, Inc. (UAL - Free Report) reported fourth-quarter 2023 earnings per share (excluding 19 cents from non-recurring items) of $2.00, which outpaced the Zacks Consensus Estimate of $1.61 but declined 18.7% year over year.
Operating revenues of $13,626 million beat the Zacks Consensus Estimate of $13,546.8 million. The top line increased 9.9% year over year due to upbeat air-travel demand. This was driven by a 10.9% rise in passenger revenues (accounting for 91.1% of the top line) to $12,421 million. Almost 41,779 passengers traveled on UAL flights in the fourth quarter.
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With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
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