Southwest Airlines Co.

Airlines • Industrials • Dallas, TX, United States • LUV (NYQ)

214 792 4000 P.O. Box 36611, Dallas, TX 75235-1611, United States

Quarter: Q4 2025 Reported: December 5, 2025 Sentiment: Negative

Southwest Airlines Co. operates as a passenger airline company that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2024, the company operated a total fleet of 803 Boeing 737 aircraft; and served 117 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as ten near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. It also provides inflight entertainment and connectivity services; and Rapid Rewards loyalty program that enables program members to earn points for dollars spent on Southwest base fares. In addition, the company offers a suite of digital platforms to support customers' travel needs, including websites and apps; and SWABIZ, an online booking tool. Further, it provides ancillary services, such as Southwest's EarlyBird Check-In, upgraded boarding, and transportation of pets and unaccompanied minors. Southwest Airlines Co. was incorporated in 1967 and is headquartered in Dallas, Texas.

Analysis Summary

Southwest Airlines Co. issued an update to its full-year 2025 financial outlook, specifically revising its Earnings Before Interest and Taxes (EBIT), excluding special items, to approximately $500 million. This represents a significant reduction from the company's prior guidance range of $600 million to $800 million. The primary factors driving this downward revision were a decrease in revenue resulting from a government shutdown and the persistent impact of higher fuel prices.

Strategic initiatives and business segment analysis were not detailed in this specific filing, which primarily focused on the guidance update. However, the company noted that following the temporary decline in demand caused by the shutdown, bookings have since recovered to previous expectations, suggesting a resilient underlying demand environment.

Management commentary, as implied by the guidance update, indicates a proactive approach to communicating the financial impact of external events. The forward guidance explicitly states the revised EBIT expectation for the full year 2025, reflecting the cumulative effect of the identified challenges. No specific competitive positioning or market trend analysis was provided beyond the general impact of macro-economic factors like government shutdowns and fuel prices.

Key risk factors highlighted in the cautionary statement, and some of which materialized to impact current guidance, include the impact of governmental actions such as shutdowns, fuel price changes and volatility, and the company's dependence on The Boeing Company for aircraft deliveries and certifications. Other risks mentioned include the ability to implement and maintain necessary information technology systems, consumer behavior, labor matters, and dependence on other third parties. No analyst Q&A highlights were available as this was a Form 8-K filing, not an earnings call transcript.

Key Highlights

• Full-year 2025 EBIT guidance revised down to approximately $500 million.
• Previous full-year 2025 EBIT guidance was $600 million to $800 million.
• The downgrade is primarily due to lower revenue caused by a government shutdown.
• Higher fuel prices also contributed significantly to the revised outlook.
• Bookings have returned to previous expectations following the temporary decline related to the shutdown.
• This update was provided via a Form 8-K, not a full earnings call.
• The revision represents a $100 million to $300 million reduction from the prior forecast range.

Financial Metrics

eps

YoY: not provided

revenue

N/A

YoY: impacted negatively by government shutdown

guidance

net income

N/A

YoY: not provided

Stock Performance (90 Days)

Data through Dec 29, 2025

Layoff Events

Earnings Calls

Positive Signals

• Bookings have returned to previous expectations post-government shutdown.
• The company promptly identified and quantified the financial impact of external events.
• Underlying demand for travel appears resilient despite temporary disruptions.
• Management's transparency in updating financial expectations.

Risks & Concerns

— Government shutdowns causing revenue loss and demand disruption.
— Volatility and increase in fuel prices impacting operating costs.
— Dependence on The Boeing Company for aircraft deliveries and certifications.
— Challenges in timely and effective implementation of information technology systems.
— Potential impact of labor matters on operations and results.