Southwest's Losses Expected To Shrink in Q1 as It Shakes Off Disastrous Holiday Season

Airline likely will report increased capacity gave revenue a boost, but fuel costs remain elevated

Close-up image of a Southwest Airlines Boeing 737 jet shown on the apron.

Angel Di Bilio / Getty Images

Southwest Airlines (LUV), America's second-largest airline by market capitalization, is expected to report its losses narrowed in the first quarter, with the air travel rebound and increased capacity helping offset higher fuel costs.

Key Takeaways

  • Southwest's first-quarter revenue is expected to increase 22% over last year, with key performance metrics load factor and available seat miles both improving.
  • The airline is forecast to report a quarterly loss of $133.6 million, an improvement over a $191 million loss in the same quarter last year.  
  • Fuel costs are up more than 50% from last year, but could be lower than in the three previous quarters. 

The Dallas-based carrier is expected to post a first-quarter loss of $133.6 million, or 22 cents a share, compared with a loss of $191 million, or 32 cents a share, in the prior-year quarter, according to estimates compiled by Visible Alpha. Southwest is projected to report $5.7 billion in quarterly revenue, a 22% increase over last year. The airline will report its earnings before markets open on Thursday.

Fuel costs are one factor squeezing Southwest’s earnings. The airline likely will say it spent $1.5 billion on fuel last quarter, about 50% more than a year ago. However, it would be the least spent on fuel in the past four quarters.

The company posted a fourth-quarter loss in January after a winter storm forced it to cancel more than 16,700 flights, costing it as much as $825 million. CEO Bob Jordan said then that he expected the company to post another loss in the first quarter of 2023.

Competitors Delta and United Airlines missed earnings expectations for the most-recent quarter. However, they forecast a strong summer travel season ahead. Jordan also has said that booking trends appeared positive.

“Our 2023 plan continues to support solid profits with year-over-year margin expansion for full year 2023,” Jordan said in the company’s 2022 fourth-quarter release. 

Southwest shares have fallen more than 3% this year, compared with a 6% gain for the S&P 500 Transportation Select Industry Index and an 8% gain for the S&P 500.

Total year-to-date return of Southwest Airlines, S&P 500, and S&P 500 Transportation Industry Group, as of April 25, 2023.

YCharts

Key Metric: Load Factor

Load factor is an important way to track an airline’s performance, as the figure shows how many available seats the airline is able to sell, or how “loaded” the plane is. Southwest is projected to increase its load factor to 81.8%, up from 77% in the year-ago quarter.

Southwest is expected to grow its available seat miles, another measure of airline capacity, by 10% over last year’s first quarter.

Southwest Airlines Key Metrics
   Q1 2023 (est.)  Q1 2022  Q1 2021
 Adjusted earnings per share ($)  -0.22  -0.32  -1.72
 Revenue ($B)  5.7  4.7  2.1
 Load factor (%)  81.83  77.02  64.27
Source: Visible Alpha
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. CompaniesMarketCap. "Largest Airlines by Market Cap."

  2. Visible Alpha. "Financial Data."

  3. Southwest Airlines. Southwest Airlines Reports Fourth Quarter and Full Year 2022 Results.

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description