Airlines

Southwest Airlines Reports Fourth Quarter and Full Year 2022 Results

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Southwest Airlines Co. today reported its fourth quarter and full year 2022 financial results:

  • Fourth quarter net loss of $220 million, or $0.37 loss per diluted share
  • Fourth quarter net loss, excluding special items1, of $226 million, or $0.38 loss per diluted share
  • Full year net income of $539 million, or $0.87 per diluted share
  • Full year net income, excluding special items, of $723 million, or $1.16 per diluted share
  • Record fourth quarter and full year operating revenues of $6.2 billion and $23.8 billion, respectively
  • Liquidity2 of $13.3 billion, well in excess of debt outstanding of $8.1 billion

Bob Jordan, President and Chief Executive Officer, stated, “Due to the operational disruptions in late December, which resulted in more than 16,700 flight cancellations, we incurred a fourth quarter pre-tax negative impact of approximately $800 million (or approximately $620 million on an after-tax basis), which resulted in a fourth quarter 2022 net loss.

“Despite the negative financial impacts in first quarter 2022 due to the Omicron variant and in fourth quarter 2022 due to the operational disruptions, we generated full year 2022 net income, excluding special items, of $723 million.

“With regard to the operational disruptions, I am deeply sorry for the impact to our Employees and Customers.

“We have swiftly taken steps to bolster our operational resilience and are undergoing a detailed review of the December events.

“In addition, our Board of Directors has established an Operations Review Committee that is working with the Company’s Management to help oversee the Company’s response.

“As part of our efforts, we are also conducting a third-party review of the December events and are reexamining the priority of technology and other investments planned in 2023.

“Based on current revenue and cost trends, we currently expect a first quarter 2023 net loss. However, we are encouraged by current booking trends in March 2023.

“Our 2023 plan continues to support solid profits with year-over-year margin expansion for full year 2023.

“We remain intent on achieving the long-term financial goals outlined at our December 2022 Investor Day.

“We also intend to regain our 51-year reputation for operational excellence. As ever, I am grateful for our Employees and their resilience and steadfast focus on Safety, Customer Service, and Teamwork. They remain the heart and soul of Southwest Airlines.”

Guidance and Outlook

The following tables introduce or update selected financial guidance for first quarter and full year 2023, as applicable:

1Q 2023 Estimation

Previous estimation

Operating revenue, year-over-year

Up 20% to 24%

Not provided

ASMs (a), year-over-year

Up ~10%

No change

Economic fuel costs per gallon1,3

$3.25 to $3.35

$3.00 to $3.10

Fuel hedging premium expense per gallon

$0.06

No change

Fuel hedging cash settlement gains per gallon

$0.16

No change

ASMs per gallon (fuel efficiency)

78 to 80

Not provided

CASM-X (b), year-over-year4

Up 2% to 4%

Flat to up 2%

Scheduled debt repayments (millions) (c)

~$60

~$20

Interest expense (millions)

~$65

No change

 2023 Estimation

Previous estimation

ASMs, year-over-year

Up 16% to 17%

Up ~15%

Economic fuel costs per gallon1,3

$2.90 to $3.00

$2.85 to $2.95

Fuel hedging premium expense per gallon

$0.06

No change

Fuel hedging cash settlement gains per gallon

$0.14

$0.13

CASM-X, year-over-year4

Down 6% to 8%

Down 1% to 3%

Scheduled debt repayments (millions) (c)

~$85

~$80

Interest expense (millions)

~$250

No change

Aircraft (d)

843

841

Effective tax rate

23% to 24%

Not provided

Capital spending (billions) (e)

$4.0 to $4.5

No change

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