Southwest Airlines delivered a positive set of results in the quarter, surpassing Wall Street expectations on all counts. The rise in demand and limited capacity led to a favourable yield environment and recorded operating revenues of $6.7 billion for the quarter. Despite increasing fuel and inflationary cost pressures, the revenue performance resulted in quarterly net profitability, excluding special items, of $825 million. Due to lower-than-anticipated benefit expenses and the deferral of some maintenance expenditures into the second half of this year, the second quarter CASM-X was favourable to their earlier projection range, increasing 13.1% compared to the second quarter of 2019. Southwest Airlines also announced a new countrywide offer on travel until February 2023. Furthermore, as the management continues to reconstruct the large majority of the flights they canceled during the pandemic to pay for new city growth, their network won’t be entirely restored until at least the end of 2023, even though capacity levels are on par with 2019 in the second half of this year. Overall, we maintain our ‘Hold’ rating on Southwest Airlines with a revised target price.
Our Report Structure:
⦁ Company Overview
⦁ Investment Thesis
⦁ Key Drivers
⦁ Historical Quarterly Statement Analysis – Income Statement & Cash Flows
⦁ Historical Quarterly Balance Sheet Analysis
⦁ Historical Annual Financial Statement Analysis
⦁ Analysis Of Key Financial Ratios
⦁ Financial Forecasts For 3 Years
⦁ Forecasting The Capital Structure & Net Debt
⦁ Discounted Cash Flow Valuation
⦁ Trading Multiples
⦁ Key Risks
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