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Southwest Airlines (LUV) Beats on Q4 Earnings & Revenues
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Southwest Airlines Company (LUV - Free Report) reported better-than-expected earnings and revenues in the fourth quarter of 2017. The carrier’s earnings per share (excluding $2.41 from non-recurring items) of 77 cents beat the Zacks Consensus Estimate of 76 cents. The bottom line also increased 4.1% on a year-over-year basis.
Operating revenues of $5,274 million surpassed the Zacks Consensus Estimate of $5,242.1 million. Also, the top line improved 3.9% year over year. Passenger revenues accounted for bulk (89.8%) of the same.
Operating Statistics
Airline traffic, measured in revenue passenger miles, nudged up 2.6% year over year to 32.19 billion in the quarter under review. Capacity or available seat miles (ASMs) expanded 2% to 37.89 billion. Load factor (percentage of seats filled by passengers) came in at 85%, up 60 basis points on a year-over-year basis as traffic growth was more than capacity expansion.
Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) inched up 0.5% to 12.50 cents. In the reported quarter, revenue per available seat mile (RASM), was 13.92 cents, up 1.9% year over year.
Operating Expenses & Income
In the fourth quarter, operating income (as reported) came in at $773 million compared with $846 million in the prior-year quarter. Excluding special items, the operating income stood at $746 million, down 2.9%. Total adjusted operating expenses (excluding profit sharing, fuel and oil expense plus special items) climbed 6.2% year over year.
Fuel price per gallon (inclusive of fuel tax: economic) increased 1% year over year to $2.09. Consolidated unit cost or cost per available seat mile (CASM) — excluding fuel, oil and special items — rose 4.1% year over year to 9.17 cents.
Southwest Airlines Company Price, Consensus and EPS Surprise
The company had cash and cash equivalents of $1,495 million at the end of the fourth quarter of 2017 compared with $1,680 million at the end of the comparable period in 2016. As of Dec 31, 2017, this Zacks Rank #3 (Hold) company had a long-term debt (less current maturities) of $3,320 million compared with $2,821 million at the end of 2016.
For the first quarter of 2018, the carrier expects revenue per available seat mile (RASM) to rise between 1% and 2%. First-quarter unit costs excluding fuel and oil expense, profit-sharing expense and special items are estimated to grow in the band of 0.5-1.5%. While economic fuel costs for the first quarter are predicted in the range of $2.10-$2.15 per gallon. For 2018, the metric is anticipated in the same range, reflecting an increase of 2% from the year-ago figure.
Upcoming Releases
Investors interested in the broader Transportation sector keenly await the fourth-quarter earnings reports from key players namely Hawaiian Holdings, Inc. (HA - Free Report) , Allegiant Travel Co. (ALGT - Free Report) and Union Spirit Airlines, Inc. (SAVE - Free Report) . While Hawaiian Holdings is scheduled to report fourth-quarter earnings on Jan 29, Allegiant and Spirit Airlines is slated to release the same on Jan 31 and Feb 6, respectively.
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Southwest Airlines (LUV) Beats on Q4 Earnings & Revenues
Southwest Airlines Company (LUV - Free Report) reported better-than-expected earnings and revenues in the fourth quarter of 2017. The carrier’s earnings per share (excluding $2.41 from non-recurring items) of 77 cents beat the Zacks Consensus Estimate of 76 cents. The bottom line also increased 4.1% on a year-over-year basis.
Operating revenues of $5,274 million surpassed the Zacks Consensus Estimate of $5,242.1 million. Also, the top line improved 3.9% year over year. Passenger revenues accounted for bulk (89.8%) of the same.
Operating Statistics
Airline traffic, measured in revenue passenger miles, nudged up 2.6% year over year to 32.19 billion in the quarter under review. Capacity or available seat miles (ASMs) expanded 2% to 37.89 billion. Load factor (percentage of seats filled by passengers) came in at 85%, up 60 basis points on a year-over-year basis as traffic growth was more than capacity expansion.
Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) inched up 0.5% to 12.50 cents. In the reported quarter, revenue per available seat mile (RASM), was 13.92 cents, up 1.9% year over year.
Operating Expenses & Income
In the fourth quarter, operating income (as reported) came in at $773 million compared with $846 million in the prior-year quarter. Excluding special items, the operating income stood at $746 million, down 2.9%. Total adjusted operating expenses (excluding profit sharing, fuel and oil expense plus special items) climbed 6.2% year over year.
Fuel price per gallon (inclusive of fuel tax: economic) increased 1% year over year to $2.09. Consolidated unit cost or cost per available seat mile (CASM) — excluding fuel, oil and special items — rose 4.1% year over year to 9.17 cents.
Southwest Airlines Company Price, Consensus and EPS Surprise
Southwest Airlines Company Price, Consensus and EPS Surprise | Southwest Airlines Company Quote
Liquidity
The company had cash and cash equivalents of $1,495 million at the end of the fourth quarter of 2017 compared with $1,680 million at the end of the comparable period in 2016. As of Dec 31, 2017, this Zacks Rank #3 (Hold) company had a long-term debt (less current maturities) of $3,320 million compared with $2,821 million at the end of 2016.
While the carrier generated a cash flow of $1.8 billion at the end of 2017, it returned $1.9 billion to its shareholders through a combination of dividends and share repurchases. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Guidance
For the first quarter of 2018, the carrier expects revenue per available seat mile (RASM) to rise between 1% and 2%. First-quarter unit costs excluding fuel and oil expense, profit-sharing expense and special items are estimated to grow in the band of 0.5-1.5%. While economic fuel costs for the first quarter are predicted in the range of $2.10-$2.15 per gallon. For 2018, the metric is anticipated in the same range, reflecting an increase of 2% from the year-ago figure.
Upcoming Releases
Investors interested in the broader Transportation sector keenly await the fourth-quarter earnings reports from key players namely Hawaiian Holdings, Inc. (HA - Free Report) , Allegiant Travel Co. (ALGT - Free Report) and Union Spirit Airlines, Inc. (SAVE - Free Report) . While Hawaiian Holdings is scheduled to report fourth-quarter earnings on Jan 29, Allegiant and Spirit Airlines is slated to release the same on Jan 31 and Feb 6, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7% and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>