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Southwest Airlines faces $149 million net loss in Q1 2025

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Southwest Airlines faces $149 million net loss in Q1 2025
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Bob Jordan President and CEO of Southwest Airlines | Official Website

Southwest Airlines has reported a net loss of $149 million for the first quarter of 2025. This comes amid a period of substantial changes for the company, which has faced challenges including a proxy battle with an activist shareholder. During this time, Southwest recorded revenues of $6.4 billion. Of this total, $5.8 billion was from passenger revenues, showing a 1.6% increase compared to the previous year. Operating expenses also decreased by 1.1%, amounting to $6.6 billion, which included $62 million in severance-related costs. The airline's operating loss stood at $223 million but improved to $128 million when excluding special items.

Bob Jordan, President and CEO of Southwest Airlines, credited the company's performance in the first quarter, stating, “We ran a stellar operation in the first quarter, leading the industry in on-time performance and improving on almost every operating metric, year-over-year.”

However, the airline experienced a decline in operational metrics compared to the first quarter of 2024. Revenue passengers decreased by 8.8% to 29.9 million, enplaned passengers fell by 9.2% to 37.1 million, and load factors decreased by 4.4% to 73.9%. Furthermore, Southwest operated 331,886 trips during the quarter, compared to 349,979 during the same period in the previous year.

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Despite carrying fewer passengers, Southwest's average passenger fare increased from $173.76 to $193.75. Passenger revenue yield also rose from 17.26¢ per revenue passenger mile (RPM) to 18.97¢. The airline benefitted from lower fuel costs, with the average fuel cost per gallon dropping by 14.7% to $2.49 compared to the same period last year. The cost per available seat mile (CASM) saw an increase of 0.9% year-on-year, and CASM excluding fuel, known as CASM-X, was 6.2% higher than the prior year.

Jordan acknowledged that Southwest Airlines is evolving, noting changes such as removing free checked bags, increasing its premium seating options, and launching new initiatives like red-eye flights and international partnerships. “We remain well-positioned with and committed to a strong and efficient investment-grade balance sheet and have a valuable contractual order book with Boeing that offers flexibility,” he added.

Amid the macroeconomic uncertainty attributed to U.S. trade policies, the airline plans to reduce capacity in the second half of 2025. This decision means the overall annual capacity may only increase by 1% year-over-year. The ongoing economic unpredictability has also led Southwest to refrain from reiterating its earnings guidance for 2025 and 2026. Looking forward to the second quarter, the airline anticipates revenue per available seat mile (RASM) to be flat to 4% lower year-over-year, with capacity growth between 1% and 2%. It expects fuel prices to be within the $2.20 to $2.30 per gallon range and projects CASM-X to rise by 3.5% to 5.5%.

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