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Southwest Airlines (LUV) Stock Slides Despite Earnings, Revenue Beat

Buy Southwest Airline Shares Here Your Capital Is At Risk
Updated 28 Jul 2022

Key points:

  • Southwest Airlines reports earnings before the bell
  • The carrier beat earning and revenue forecasts
  • However, shares are down more than 4% premarket

Southwest Airlines (NYSE: LUV) shares are down 4.2% premarket despite reporting earnings before the bell Thursday, July 28, beating earnings and revenue expectations.

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The US carrier posted earnings of $1.20 per share on revenue of $6.7 billion, a quarterly record. Analysts expected earnings of $1.17 on revenue of $6.6 billion.

Southwest reported second-quarter operating revenues per available seat mile increased 22%, driven by a passenger yield increase of 18.4%, and coupled with a load factor increase of 0.7 points, compared with the second quarter of 2019.

Southwest Airlines

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Southwest CEO Bob Jordan said the report represented a “significant milestone” in its pandemic recovery.

“Travel demand surged in second quarter, and thus far, strong demand trends continue in third quarter 2022,” he added.

The company said it experienced inflationary pressures and headwinds in the second quarter, which they expect will continue in the year's second half. However, its fuel hedge continues to provide significant protection against higher fuel prices.

“Barring significant unforeseen events and based on current trends, we expect to be solidly profitable for the remaining two quarters of this year, and for full year 2022,” Jordan stated. “Since April, we have been delivering a more reliable product for our Customers with cancellations representing less than one percent of scheduled flights in May and June 2022, which is a completion factor of more than 99 percent. We have added flights in second half 2022—especially in short-haul business markets—to better support our operation and the restoration of our route network.”

Southwest sees operating revenue up between 8% and 12% in the third quarter compared to Q3 2019. In addition, full-year 2022 available seat miles are forecast to be down 4%.