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Southwest Airlines (LUV) Q2 Earnings & Revenues Beat, Up Y/Y
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Southwest Airlines Co. (LUV - Free Report) reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
Quarterly earnings of $1.30 outpaced the Zacks Consensus Estimate of $1.17. Moreover, the bottom line improved by more than 100% year over year. Operating revenues of $6,728 million outperformed the Zacks Consensus Estimate of $6,719.1 million and jumped 67.9% year over year.
Southwest Airlines Co. Price, Consensus and EPS Surprise
Airline traffic, measured in revenue passenger miles, surged 17.5% year over year to 32.52 billion in the quarter under review. Capacity or available seat miles (ASMs) climbed 11.7% year over year to 37.32 billion. Load factor (percentage of seats filled by passengers) improved to 87.1% from 82.9% in the year-ago quarter as traffic growth outweighed capacity expansion.
Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) ascended 53.5% year over year to 16.39 cents. Revenue per available seat mile (RASM) improved 50.4% to 18.03 cents.
Operating Expenses & Income
In the second quarter, Southwest incurred an operating income (as reported) of $1,158 million compared with $594 million in the year-ago period. On an adjusted basis (excluding special items), the company reported operating income of $1,173million against a loss of $162 million. Total adjusted operating expenses (excluding profit sharing, special items, fuel and oil expenses) increased 17.5%.
Fuel cost per gallon (inclusive of fuel tax: economic) rose 75% to $3.36. However, consolidated unit cost or cost per available seat mile (CASM) excluding fuel, oil and profit-sharing expenses, and special items increased 4.7% year over year.
Liquidity
Southwest Airlines ended the second quarter with cash and cash equivalents of $13,234 million compared with $13,098 million at the end of March 2022. As of Jun 30, 2022, the company had long-term debt (less current maturities) of $8,877 million compared with $10,309 million at the end of March 2022.
Q3 & Full-Year Outlook
For third-quarter 2022, operating revenues are expected to register 8-12% growth compared with 2019. ASMs are estimated to remain flat from the comparable period in 2019. Economic fuel costs per gallonare expected to be $3.25 to $3.35. LUV expects CASM, excluding fuel, oil and profit-sharing expenses, and special items, to increase 12-15% in the ongoing quarter from the comparable period in 2019. Interest expenses are expected to be $90 million in the second quarter.
For 2022, Southwest continues to expect capacity to decline approximately 4% from the 2019 level. Economic fuel costs per gallon are now estimated between $2.95 and $3.05 (prior guidance: $2.75-$2.85). CASM, excluding fuel, oil and profit-sharing expenses, and special items, is anticipated to increase 12-16% in 2022 from 2019. Interest expenses are expected to be $360 million in 2022. The effective tax rate is expected to be 24-26% in the year.
Delta AirLines’ (DAL - Free Report) second-quarter 2022 earnings (excluding 29 cents from non-recurring items) of $1.44 per share fell short of the Zacks Consensus Estimate of $1.71. Escalated operating expenses induced the earnings miss. Multiple flight cancellations in May and June also hurt results.
The earnings miss disappointed investors, resulting in the stock shedding value in early trading. In the year-ago quarter, Delta incurred a loss of $1.07 per share when air-travel demand was not as buoyant as in the current scenario.
DAL’s revenues came in at $13,824 million, which not only beat the Zacks Consensus Estimate of $13,608.9 million and soared 94% from the year-ago quarter’s figure as air-travel demand rebounded from the pandemic lows. The uptick in air-travel demand in the United States can be gauged from the fact that 75.9% of second-quarter 2022 passenger revenues came from the domestic markets.
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
JBHT’s quarterly earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year.
JBHT’s total operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million. The top line jumped 32% year over year on the back of strength across all segments. JBHT’s total operating revenues, excluding fuel surcharges, rose 21.2% year over year.
CSX Corporation (CSX - Free Report) )reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
CSX’s quarterly earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.
CSX’s total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $2,990 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge, and contribution from the acquisition of Quality Carriers. CSX’s overall revenues per unit increased 27%.
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Southwest Airlines (LUV) Q2 Earnings & Revenues Beat, Up Y/Y
Southwest Airlines Co. (LUV - Free Report) reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
Quarterly earnings of $1.30 outpaced the Zacks Consensus Estimate of $1.17. Moreover, the bottom line improved by more than 100% year over year. Operating revenues of $6,728 million outperformed the Zacks Consensus Estimate of $6,719.1 million and jumped 67.9% year over year.
Southwest Airlines Co. Price, Consensus and EPS Surprise
Southwest Airlines Co. price-consensus-eps-surprise-chart | Southwest Airlines Co. Quote
Operating Statistics
Airline traffic, measured in revenue passenger miles, surged 17.5% year over year to 32.52 billion in the quarter under review. Capacity or available seat miles (ASMs) climbed 11.7% year over year to 37.32 billion. Load factor (percentage of seats filled by passengers) improved to 87.1% from 82.9% in the year-ago quarter as traffic growth outweighed capacity expansion.
Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) ascended 53.5% year over year to 16.39 cents. Revenue per available seat mile (RASM) improved 50.4% to 18.03 cents.
Operating Expenses & Income
In the second quarter, Southwest incurred an operating income (as reported) of $1,158 million compared with $594 million in the year-ago period. On an adjusted basis (excluding special items), the company reported operating income of $1,173million against a loss of $162 million. Total adjusted operating expenses (excluding profit sharing, special items, fuel and oil expenses) increased 17.5%.
Fuel cost per gallon (inclusive of fuel tax: economic) rose 75% to $3.36. However, consolidated unit cost or cost per available seat mile (CASM) excluding fuel, oil and profit-sharing expenses, and special items increased 4.7% year over year.
Liquidity
Southwest Airlines ended the second quarter with cash and cash equivalents of $13,234 million compared with $13,098 million at the end of March 2022. As of Jun 30, 2022, the company had long-term debt (less current maturities) of $8,877 million compared with $10,309 million at the end of March 2022.
Q3 & Full-Year Outlook
For third-quarter 2022, operating revenues are expected to register 8-12% growth compared with 2019. ASMs are estimated to remain flat from the comparable period in 2019. Economic fuel costs per gallonare expected to be $3.25 to $3.35. LUV expects CASM, excluding fuel, oil and profit-sharing expenses, and special items, to increase 12-15% in the ongoing quarter from the comparable period in 2019. Interest expenses are expected to be $90 million in the second quarter.
For 2022, Southwest continues to expect capacity to decline approximately 4% from the 2019 level. Economic fuel costs per gallon are now estimated between $2.95 and $3.05 (prior guidance: $2.75-$2.85). CASM, excluding fuel, oil and profit-sharing expenses, and special items, is anticipated to increase 12-16% in 2022 from 2019. Interest expenses are expected to be $360 million in 2022. The effective tax rate is expected to be 24-26% in the year.
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.
Performance of Other Transportation Companies
Delta AirLines’ (DAL - Free Report) second-quarter 2022 earnings (excluding 29 cents from non-recurring items) of $1.44 per share fell short of the Zacks Consensus Estimate of $1.71. Escalated operating expenses induced the earnings miss. Multiple flight cancellations in May and June also hurt results.
The earnings miss disappointed investors, resulting in the stock shedding value in early trading. In the year-ago quarter, Delta incurred a loss of $1.07 per share when air-travel demand was not as buoyant as in the current scenario.
DAL’s revenues came in at $13,824 million, which not only beat the Zacks Consensus Estimate of $13,608.9 million and soared 94% from the year-ago quarter’s figure as air-travel demand rebounded from the pandemic lows. The uptick in air-travel demand in the United States can be gauged from the fact that 75.9% of second-quarter 2022 passenger revenues came from the domestic markets.
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
JBHT’s quarterly earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year.
JBHT’s total operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million. The top line jumped 32% year over year on the back of strength across all segments. JBHT’s total operating revenues, excluding fuel surcharges, rose 21.2% year over year.
CSX Corporation (CSX - Free Report) )reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
CSX’s quarterly earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.
CSX’s total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $2,990 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge, and contribution from the acquisition of Quality Carriers. CSX’s overall revenues per unit increased 27%.