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Jun 30, 2025
Southwest Q2 2025 Earnings Report
Southwest Airlines reported lower profitability in Q2 2025 as revenue declined slightly, but the company made progress with its transformational initiatives.
Key Takeaways
Southwest Airlines posted a $213 million net income for Q2 2025 on $7.24 billion in revenue. While operating income declined year-over-year, new initiatives such as bag fees and a basic economy product began contributing incremental revenue.
Total operating revenue was $7.24 billion, down 1.5% year-over-year.
Net income was $213 million, with adjusted net income at $230 million.
Passenger revenue totaled $6.63 billion, while freight revenue was $44 million.
Fuel costs decreased significantly to $1.33 billion due to lower fuel prices and improved fleet efficiency.
Revenue by Segment
Forward Guidance
Southwest expects sequential improvement in revenue trends for the second half of 2025 as bag fees and premium seating initiatives ramp up, though higher operating costs remain a challenge.
Positive Outlook
- Bag fee revenue exceeded expectations.
- Basic economy rollout improving incremental revenue.
- Assigned and premium seating sales start in Q3 2025 for January 2026 flights.
- Improved domestic leisure demand trends expected in the second half.
- Strong liquidity with $3.8 billion in cash and credit access.
Challenges Ahead
- RASM guidance down 2% to up 2% year-over-year for Q3 2025.
- CASM-X expected to rise 3.5% to 5.5% due to labor and maintenance costs.
- Lower conversion rate impact from basic economy optimization earlier in the quarter.
- High capital expenditures of $2.5 to $3.0 billion for 2025.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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