olivlawolivlaw

olivLaw · US equity research

Southwest Airlines Co. LUV

Air Transportation, Scheduled · SIC 4512 · Vertical: Air Transportation, Scheduled (SIC 4512)

43.96USD+3.61% · 1 dayClose 02 Nov 2026

Southwest Airlines is a U.S. passenger airline that operates mainly a point-to-point network and competes on competitive fares and an upgraded product. It reported operating revenues of 28.1 billion USD for 2025, and in the third quarter of 2026 its revenue growth reached 21.2%, which keeps investors focused on whether the transformation can sustain margins.

At the close of 02 Nov 2026, Southwest Airlines Co. (LUV) stock was 43.96 USD (+3.61% on the day), with market capitalisation 21.5 bn USD, P/E 21.7 on diluted EPS of 2.03 USD over the last 12 months, dividend yield 1.64%, beta 1.40, 52-week range 29.67–54.80 USD. Latest reported quarter (Q3 2026): revenue of 8.4 bn USD (+21.2% YoY), net income of 270.0 m USD (+400.0% YoY), diluted EPS 0.55 USD.

Data as of · AI analysis dated · Source: SEC filings and closing prices, computed by olivLaw.

Market cap
21.5 bn USD
shares as of 21 Oct 2026
P/E (TTM)
21.7
Diluted EPS TTM 2.03 · TTM to 30 Sept 2026
E/P (TTM)
4.61%
TTM to 30 Sept 2026
Dividend yield
1.64%
DPS 12m 0.72
Beta (2y)
1.40
Volatility (1y) 43%
52-week range
29.6754.80

Price history

Loading chart…

Technical reading

RSI (14)
60.8
strong (55–70)
Bollinger (20, 2)
38.47 – 44.55
in the upper half of the band · %B 0.90 · band width 14.6%
SMA 50 / 200
40.82 / 43.46
mixed trend
MACD (12, 26, 9)
0.58 / 0.24
MACD above signal

Indicators describe past prices; on their own they do not predict direction. On our history the RSI ≤ 40 filter added no return (see the signals methodology).

Performance

CompanyS&P 500vs S&P 500Vertical median
1 month+3.5%−2.3%+5.9 pp—
3 months−6.6%−0.8%−5.8 pp—
6 months+14.6%+4.7%+9.9 pp—
Year to date+6.4%+10.2%−3.8 pp—
1 year+45.1%+10.3%+34.8 pp−4.4%
3 years+85.5%+73.0%+12.5 pp+48.3%
5 years−11.1%+61.8%−72.9 pp—
Max drawdown (1y)
−33.8%
18 Feb 2026 → 30 Mar 2026
Max drawdown (5y)
−57.4%
05 Nov 2021 → 31 Oct 2023
Compound annual growth (5y)
−2.3%
S&P 500 +10.1%

Price returns, dividends excluded.

Quarterly results

Latest quarter: Q3 2026 · 30 Sept 2026

Revenue
8.4 bn USD
+21.2% YoY
Net income
270.0 m USD
+400.0% YoY
Diluted EPS
0.55
+450.0% YoY
net / operating
3.2% / 4.5%

Quarterly margins

Quarterly statements · USD

Fiscal yearQ4 '24Q1 '25Q2 '25Q3 '25Q4 '25Q1 '26Q2 '26Q3 '26
Revenue6.9 bn6.4 bn7.2 bn6.9 bn7.4 bn7.2 bn8.4 bn8.4 bn
Operating income278.0 m-223.0 m225.0 m35.0 m391.0 m330.0 m285.0 m379.0 m
Depreciation & amortisation407.0 m396.0 m400.0 m394.0 m371.0 m398.0 m402.0 m398.0 m
Interest expense58.0 m46.0 m39.0 m35.0 m47.0 m54.0 m64.0 m70.0 m
Pre-tax income329.0 m-192.0 m280.0 m68.0 m408.0 m285.0 m306.0 m355.0 m
Income tax68.0 m-43.0 m67.0 m14.0 m85.0 m58.0 m73.0 m85.0 m
Net income261.0 m-149.0 m213.0 m54.0 m323.0 m227.0 m233.0 m270.0 m
Diluted EPS0.41 ≈-0.260.390.100.56 ≈0.450.470.55
Operating cash flow476.0 m860.0 m401.0 m287.0 m295.0 m1.4 bn530.0 m513.0 m
Capex460.0 m527.0 m660.0 m735.0 m751.0 m630.0 m818.0 m1.0 bn
Dividends paid-1.0 m107.0 m103.0 m189.0 m093.0 m88.0 m176.0 m
Share repurchases250.0 m750.0 m1.5 bn250.0 m50.0 m1.3 bn00

≈ derived quarter (cumulative difference / share-days average)

E/P over time

E/P = trailing-12-month diluted EPS / price at quarter end. E/P is the inverse of P/E and stays defined when earnings are negative.

Today's P/E sits at the 50 percentile of its own 38-quarter history (min 8.7, median 21.8, max 264.7; quarters with earnings only).

Fiscal years

Fiscal year20182019202020212022202320242025
Revenue22.0 bn22.4 bn9.0 bn15.8 bn23.8 bn26.1 bn27.5 bn28.1 bn
Revenue YoY+3.8%+2.1%−59.7%+74.5%+50.8%+9.6%+5.3%+2.1%
Net income2.5 bn2.3 bn-3.1 bn977.0 m539.0 m465.0 m465.0 m441.0 m
Net income YoY−26.6%−6.7%−233.7%unavailable−44.8%−13.7%0.0%−5.2%
Diluted EPS4.294.27-5.441.610.870.760.760.79
Diluted EPS YoY−23.0%−0.5%−227.4%unavailable−46.0%−12.6%0.0%+3.9%
net %11.2%10.3%-34.0%6.2%2.3%1.8%1.7%1.6%
Free cash flow3.0 bn3.0 bn-1.6 bn1.8 bn-134.0 m-356.0 m-1.6 bn-831.0 m

Reported results vs expectations

Loading…

Balance sheet & financial health

Fiscal year 2025 · 31 Dec 2025

Cash
3.2 bn USD
Financial debt
5.3 bn USD
Net debt
2.0 bn USD
Equity
8.0 bn USD
Total assets
29.1 bn USD
Debt / equity
0.66x
Current ratio
0.52x
ROE
4.8%
ROA
1.4%
FCF margin
-3.0%

Financial statements (source on every figure)

Revenue and net income (USD)

Margins

Income statement · USD

Revenue
2023
26.1 bn
2024
27.5 bn
2025
28.1 bn

SEC (XBRL)· 05 Feb 2026verified

Operating income
2023
224.0 m
2024
321.0 m
2025
428.0 m

SEC (XBRL)· 05 Feb 2026verified

Depreciation & amortisation
2023
1.5 bn
2024
1.7 bn
2025
1.6 bn

SEC (XBRL)· 05 Feb 2026verified

EBITDA
2023
1.7 bn ≈
2024
2.0 bn ≈
2025
2.0 bn ≈

SEC (XBRL)· 05 Feb 2026derived

Interest expense
2023
259.0 m
2024
249.0 m
2025
167.0 m

SEC (XBRL)· 05 Feb 2026verified

Pre-tax income
2023
633.0 m
2024
598.0 m
2025
563.0 m

SEC (XBRL)· 05 Feb 2026verified

Income tax
2023
168.0 m
2024
133.0 m
2025
122.0 m

SEC (XBRL)· 05 Feb 2026verified

Net income
2023
465.0 m
2024
465.0 m
2025
441.0 m

SEC (XBRL)· 05 Feb 2026verified

Diluted EPS
2023
0.76
2024
0.76
2025
0.79

SEC (XBRL)· 05 Feb 2026verified

Weighted average diluted shares
2023
640.0 m
2024
643.0 m
2025
558.0 m

SEC (XBRL)· 05 Feb 2026verified

Dividend per share
2023
0.72
2024
0.72
2025
0.72

SEC (XBRL)· 05 Feb 2026verified

Balance sheet · USD

Cash
2023
9.3 bn
2024
7.5 bn
2025
3.2 bn

SEC (XBRL)· 05 Feb 2026verified

Receivables
2023
104.0 m
2024
47.0 m
2025
98.0 m

SEC (XBRL)· 05 Feb 2026verified

Current assets
2023
14.0 bn
2024
11.3 bn
2025
5.6 bn

SEC (XBRL)· 05 Feb 2026verified

Property, plant & equipment, net
2023
19.4 bn
2024
19.1 bn
2025
20.2 bn

SEC (XBRL)· 05 Feb 2026verified

Goodwill
2023
970.0 m
2024
970.0 m
2025
970.0 m

SEC (XBRL)· 05 Feb 2026verified

Intangibles (excl. goodwill)
2023
296.0 m
2024
300.0 m
2025
296.0 m

SEC (XBRL)· 05 Feb 2026verified

Total assets
2023
36.5 bn
2024
33.8 bn
2025
29.1 bn

SEC (XBRL)· 05 Feb 2026verified

Accounts payable
2023
1.9 bn
2024
1.8 bn
2025
2.0 bn

SEC (XBRL)· 05 Feb 2026verified

Short-term debt
2023
29.0 m
2024
1.6 bn
2025
324.0 m

SEC (XBRL)· 05 Feb 2026verified

Long-term debt
2023
8.0 bn
2024
6.7 bn
2025
4.9 bn

SEC (XBRL)· 05 Feb 2026verified

Current liabilities
2023
12.3 bn
2024
12.3 bn
2025
10.9 bn

SEC (XBRL)· 05 Feb 2026verified

Equity
2023
10.5 bn †
2024
10.4 bn †
2025
8.0 bn †

SEC (XBRL)· 05 Feb 2026verified

Cash flow · USD

Operating cash flow
2023
3.2 bn
2024
462.0 m
2025
1.8 bn

SEC (XBRL)· 05 Feb 2026verified

Capex
2023
3.5 bn
2024
2.1 bn
2025
2.7 bn

SEC (XBRL)· 05 Feb 2026verified

Free cash flow
2023
-356.0 m ≈
2024
-1.6 bn ≈
2025
-831.0 m ≈

SEC (XBRL)· 05 Feb 2026derived

Investing cash flow
2023
-2.9 bn
2024
-261.0 m
2025
-1.4 bn

SEC (XBRL)· 05 Feb 2026verified

Financing cash flow
2023
-436.0 m
2024
-2.0 bn
2025
-4.7 bn

SEC (XBRL)· 05 Feb 2026verified

Dividends paid
2023
428.0 m
2024
430.0 m
2025
399.0 m

SEC (XBRL)· 05 Feb 2026verified

Share repurchases
2023
0
2024
250.0 m
2025
2.6 bn

SEC (XBRL)· 05 Feb 2026verified

Computed indicators

Growth

Revenue growth (YoY)
2.1%
computed by olivLawFY 2025
Revenue CAGR 3Y
5.6%
computed by olivLawFY 2022 → FY 2025
Revenue CAGR 5Y
25.4%
computed by olivLawFY 2020 → FY 2025
EBIT growth (YoY)
33.3%
computed by olivLawFY 2025
Net income growth (YoY)
-5.2%
computed by olivLawFY 2025
Net income CAGR 3Y
-6.5%
computed by olivLawFY 2022 → FY 2025
Net income CAGR 5Y
unavailable
the base of the ratio is not positive
EPS growth (YoY)
3.9%
computed by olivLawFY 2025
EPS CAGR 3Y
-3.2%
computed by olivLawFY 2022 → FY 2025
EPS CAGR 5Y
unavailable
the base of the ratio is not positive
FCF growth (YoY)
unavailable
the base of the ratio is not positive

Profitability

Gross margin
unavailable
input data missing
EBITDA margin
9.4%
computed by olivLawTTM to 30 Sept 2026
EBIT margin
4.4%
computed by olivLawTTM to 30 Sept 2026
Net margin
3.3%
computed by olivLawTTM to 30 Sept 2026
FCF margin
-1.4%
computed by olivLawTTM to 30 Sept 2026

Returns

ROE
13.9%
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
ROA
3.6%
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
ROIC
20.0%
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
ROCE
8.2%
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
Payout ratio (EPS)
35.5%
computed by olivLawTTM to 30 Sept 2026
Payout ratio (FCF)
unavailable
the base of the ratio is not positive

Balance sheet

Net debt
-1.5 bn USD
computed by olivLawbalance sheet at 30 Sept 2026
Net debt / EBITDA
-0.5x
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
Debt / equity
0.3x
computed by olivLawbalance sheet at 30 Sept 2026
Interest coverage
5.9x
computed by olivLawTTM to 30 Sept 2026

Liquidity

Current ratio
0.5x
computed by olivLawbalance sheet at 30 Sept 2026
Quick ratio
unavailable
input data missing
Cash ratio
0.3x
computed by olivLawbalance sheet at 30 Sept 2026

Cash

Operating cash flow
2.8 bn USD
computed by olivLawTTM to 30 Sept 2026
Capital expenditure
3.2 bn USD
computed by olivLawTTM to 30 Sept 2026
Free cash flow
-449.0 m USD
computed by olivLawTTM to 30 Sept 2026
FCF conversion
-42.6%
computed by olivLawTTM to 30 Sept 2026
Cash conversion
93.3%
computed by olivLawTTM to 30 Sept 2026

Efficiency

Days sales outstanding
1 days
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
Days inventory outstanding
unavailable
input data missing
Days payables outstanding
unavailable
input data missing
Cash conversion cycle
unavailable
input data missing

Market and valuation

Market capitalisation
21.5 bn USD
computed by olivLawbalance sheet at 30 Sept 2026
Enterprise value
20.1 bn USD
computed by olivLawbalance sheet at 30 Sept 2026
Market cap / net income TTM
20.4x
computed by olivLawTTM to 30 Sept 2026
P/E (TTM)
21.7x
computed by olivLawTTM to 30 Sept 2026
Earnings yield
4.6%
computed by olivLawTTM to 30 Sept 2026
P/B
2.9x
computed by olivLawbalance sheet at 30 Sept 2026
P/S
0.7x
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
EV/EBITDA
6.8x
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
EV/EBIT
14.5x
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
EV/Sales
0.6x
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
P/FCF
unavailable
the base of the ratio is not positive
FCF yield
-2.1%
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
Dividend yield
1.6%
computed by olivLawTTM to 30 Sept 2026
Shareholder yield (distributions)
7.7%
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026

1 indicators that do not apply to the sector.

Valuation

olivLaw classification

Neutral profile

Score: 48 / 100

A scoring methodology on indicators and valuation, not investment advice.

Closing price

43.96 USD

02 Nov 2026Source: olivLaw, closing series

Market cap: 21.5 bn USD

Key indicators

Market capitalisation
21.5 bn USD
computed by olivLawbalance sheet at 30 Sept 2026
P/E (TTM)
21.7x
computed by olivLawTTM to 30 Sept 2026
P/B
2.9x
computed by olivLawbalance sheet at 30 Sept 2026
EV/EBITDA
6.8x
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
ROE
13.9%
computed by olivLawTTM to 30 Sept 2026 · balance sheet at 30 Sept 2026
Net margin
3.3%
computed by olivLawTTM to 30 Sept 2026
Revenue growth (YoY)
2.1%
computed by olivLawFY 2025
Dividend yield
1.6%
computed by olivLawTTM to 30 Sept 2026

Coverage and freshness

30/37 reporting lines present
Latest full fiscal year: 2025
Latest reported period: 30 Sept 2026
Latest balance sheet date: 30 Sept 2026
Share count (cover of the latest filing), as of: 21 Oct 2026
Source: SEC (XBRL)published 22 Oct 2026
verified 2850derived 179

Score by group

  • Returns100
  • Balance sheet65
  • Valuation33
  • Quality54
  • Growth23

Estimated value range

Low
17.92
USD per share
Mid
20.27
USD per share
High
55.44
USD per share
Price: 43.96 USD
The price is within the range
Potential to the central value: -53.9% (value / price − 1)
Margin of safety: -116.9% (1 − price / value)
Agreement between methods: low · 3 methods used · 2 independent bases

The combined range = the median of the valid methods' low, central and high values; it is not a probability interval and does not cover every result. Envelope of all methods: 9.46 – 70.26 USD.

Valuation assumptions are editorial choices, not measured; beta is not measured.

Method ranges (USD per share)

— — Mid · ▏ Price

Valuation methods

  • DCF (discounted cash flow)unavailable · the base of the ratio is not positive
  • Peers: EV/EBITDA34.78 – 70.26 (Mid 45.70)
    8 companies used · median multiple 7.1x · quartiles 5.3x – 11.1x
    AAL, ALGT, ALK, CPA, DAL, RJET, SKYW, UAL
  • Peers: P/E17.92 – 55.44 (Mid 20.27)
    7 companies used · median multiple 10.0x · quartiles 8.8x – 27.3x
    ALGT, CPA, DAL, RJET, RYAAY, SKYW, UAL
  • Dividend discount (DDM)9.46 – 12.72 (Mid 10.85)
Multiple comparisons use the SIC vertical: Air Transportation, Scheduled (SIC 4512)

Classification (SIC) comparables group by industry code, not by economic activity; the direct group is an editorial selection by activity. Members' multiples are on their own trailing twelve months, at their own latest close.

Assumptions (illustrative, editorial)

Risk-free rate
4.3%
Equity risk premium
5.0%
Beta (default)
1.00
Cost of equity
9.3%
Terminal growth
2.5%

Factor scorecard

Neutral profile · Score 48/100

FactorValueScoreWeight used
ROIC · Quality20.0%89 (vs peers)11%
Net margin · Quality3.3%50 (vs peers)7%
FCF conversion · Quality-42.6%0 (on a fixed band)7%
Revenue CAGR 3Y · Growth5.6%47 (on a fixed band)9%
EPS CAGR 3Y · Growth-3.2%0 (on a fixed band)9%
Net debt / EBITDA · Balance sheet-0.5x90 (vs peers)11%
Interest coverage · Balance sheet5.9x68 (on a fixed band)7%
Current ratio · Balance sheet0.5x0 (on a fixed band)4%
P/E (TTM) · Valuation21.7x38 (vs peers)11%
EV/EBITDA · Valuation6.8x56 (vs peers)11%
FCF yield · Valuation-2.1%0 (on a fixed band)9%
Shareholder yield (distributions) · Returns7.7%100 (on a fixed band)7%
Payout ratio (FCF) · Returnsunavailableunavailable—

Factors without a value were dropped; the remaining weights were renormalised.

Score groups

  • Balance sheet65/100 · 3/3 factors with a value
  • Growth23/100 · 2/2 factors with a value
  • Quality54/100 · 3/3 factors with a value
  • Returns· partial100/100 · 1/2 factors with a value
  • Valuation33/100 · 3/3 factors with a value

A «partial» group is computed from under half of its weight or from one factor: it is not a full assessment of the group.

Memo

SOUTHWEST AIRLINES CO (LUV). Latest full fiscal year: 2025; data up to 2026-09-30.

Figures computed from the financial statements: revenue 28.1 bn USD in 2025; YoY growth 2.1%; net margin 3.3%; ROE 13.9%; net debt/EBITDA -0.5x.

The estimated value range is 17.92–55.44 USD per share (median of 3 methods, agreement: low); assumptions are illustrative. Against the central value of 20.27 USD, the price of 43.96 USD leaves a potential of -53.9% (value / price − 1) and a margin of safety of -116.9% (1 − price / value). The range is the median of the methods' low, central and high values, not a probability interval.

olivLaw score 48/100, methodological classification: neutral profile (score, margin of safety and method agreement together; not a judgement of the right price). Groups assessed only in part: returns. Not investment advice.

Text generated deterministically from the figures shown; no language model. Not investment advice.

What supports the thesis

  • ROIC: 20.0%
  • Net debt / EBITDA: -0.5x
  • Shareholder yield (distributions): 7.7%

What contradicts it

  • FCF conversion: -42.6%
  • EPS CAGR 3Y: -3.2%
  • Current ratio: 0.5x
  • FCF yield: -2.1%
  • The valuation methods diverge

Not assessed (insufficient data or a ratio without meaning): Payout ratio (FCF).

Versus the vertical median

Air Transportation, Scheduled (SIC 4512) · same industry (4-digit SIC) · compared with 14 companies

The size band was not applied: too few companies would have remained; the vertical includes much smaller or larger companies.

Multiples and returns vs the median

P/E
21.7x
vertical median 13.3x
above median (+62.6%)
EV/EBITDA
6.8x
vertical median 8.0x
below median (−15.5%)
P/S
0.7x
vertical median 0.6x
above median (+7.9%)
P/B
2.9x
vertical median 1.8x
above median (+67.0%)
ROE
13.9%
vertical median 7.5%
above median (+85.8%)
Net margin
3.3%
vertical median 2.7%
above median (+21.8%)
EBIT margin
4.4%
vertical median 7.5%
below median (−41.5%)
Revenue YoY
2.1%
vertical median 3.8%
below median (−43.8%)
Net debt/EBITDA
-0.5x
vertical median 1.9x
below median (−126.3%)
Dividend yield
1.6%
vertical median 0.2%
above median (+855.6%)

Price rebased to 100 (monthly, 5 years)

Companies in the vertical

Market capP/EROENet marginRevenue YoY1A / 3A
LTMLATAM Airlines Group S.A.25,661.7 bn18,042.0141.1%10.2%+11.2%−7% / unavailable
RYAAYRyanair Holdings plc57.7 bn38.0——+3.8%−19% / +17%
DALDelta Air Lines, Inc.54.9 bn16.715.9%4.6%+2.8%+30% / +126%
UALUnited Airlines Holdings, Inc.35.5 bn10.022.3%5.5%+3.5%+7% / +177%
LUVSouthwest Airlines Co21.5 bn21.713.9%3.3%+2.1%+45% / +85%
AALAmerican Airlines Group Inc.8.7 bn——-0.6%+0.8%−7% / +5%
CPACopa Holdings, S.A.5.6 bn8.426.1%18.6%+5.0%+13% / +48%
ALKAlaska Air Group, Inc.4.3 bn—-4.6%-1.2%+21.3%−11% / +1%
SKYWSkywest Inc3.1 bn7.915.1%9.7%+15.0%−20% / +73%
ALGTAllegiant Travel Co2.1 bn53.31.8%0.9%+3.7%+1% / +12%
ULCCFrontier Group Holdings, Inc.1.7 bn—-175.4%-8.9%−1.4%+63% / +90%
JBLUJetblue Airways Corp1.2 bn—-55.4%-10.0%−2.3%−31% / −28%
RJETRepublic Airways Holdings Inc.918.2 m9.27.5%4.6%+13.7%−2% / +82%
FJETStarfighters Space, Inc.45.2 m—-94.2%—unavailableunavailable / unavailable
AZULAzul SA———0.6%+10.8%unavailable / unavailable

1- and 3-year price returns: for LUV from daily closes (the same as the performance table), for the other companies from month-end closes.

olivLaw engine forecast

The world engine ran after the company's latest material disclosure. Probabilities are of TOUCHING a level within the horizon (not closing there) and sit next to the random walk (p_rw), the no-information benchmark.

Valuation scenarios (editable assumptions)

Illustrative scenarios

Illustrative: not forecasts and without probabilities. Each case is one coherent set of assumptions, computed on today's figures.

Bear
Allowed range: -50 … 50%
Allowed range: -100 … 100%
Allowed range: 0 … 100
Allowed range: -10 … 20%
Allowed range: 0 … 100%
Base
Allowed range: -50 … 50%
Allowed range: -100 … 100%
Allowed range: 0 … 100
Allowed range: -10 … 20%
Allowed range: 0 … 100%
Bull
Allowed range: -50 … 50%
Allowed range: -100 … 100%
Allowed range: 0 … 100
Allowed range: -10 … 20%
Allowed range: 0 … 100%
Nothing is saved.

Estimated price (USD)

Estimated priceBearBaseBull
1 years
27.87
Total return -35% · Per year -35%
49.24
Total return 14% · Per year 14%
74.13
Total return 71% · Per year 71%
3 years
27.66
Total return -33% · Per year -12%
54.94
Total return 31% · Per year 9%
90.73
Total return 114% · Per year 29%
5 years
27.46
Total return -31% · Per year -7%
61.29
Total return 50% · Per year 8%
111.03
Total return 166% · Per year 22%
What moves the 3-year price the most
  • Exit P/E± 13.73
  • Net margin± 9.61
  • Annual revenue growth± 7.81
  • Annual dilution± 0.81

AI analysis

AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.

In brief

Southwest Airlines is a U.S. passenger airline that operates mainly a point-to-point network and competes on competitive fares and an upgraded product. It reported operating revenues of 28.1 billion USD for 2025 1, and in the third quarter of 2026 its revenue growth reached 21.2% 3, which keeps investors focused on whether the transformation can sustain margins.

SWOT

Strengths

  • Demand and yields reached record levels in the third quarter of 2026, showing consistent pricing power 3.
  • Solid liquidity and unencumbered aircraft give financial flexibility for investment and shareholder returns 3.

Weaknesses

  • Fuel cost is a volatile factor, and the company has closed its hedging program, which can expose results to sudden price increases 13.
  • Dependence on Boeing as the sole aircraft manufacturer and delivery delays can postpone fleet and capacity plans 1.
  • Labor costs are the largest expense category, and rising costs can affect the long-term cost structure 1.

Opportunities

  • Assigned seating, redeye flights, Getaways and international partnerships could generate additional revenue if customer adoption continues 12.
  • The loyalty program and new distribution channels, including ChatGPT, could expand the customer base and loyalty revenue 3.
  • Southwest Icon lounges and Starlink connectivity could help differentiate the product in the coming years 3.

Threats

  • High fuel prices can compress margins if they cannot be passed fully to customers 13.
  • Supply chain disruptions, weather and airport capacity constraints can affect operations 1.
  • Intense competition and low fares from rivals can limit the ability to grow revenue 1.

Risks

  • Fuel price volatilityhigh

    Fuel is one of the largest cost categories, and the company no longer uses hedging instruments, which can expose results to large swings 13.

  • Dependence on a single aircraft manufacturerhigh

    The company relies on Boeing for new aircraft, and certification or delivery delays can affect capacity and fleet retirement plans 1.

  • Sensitivity to the economymedium

    Leisure and business travel can decline during periods of economic uncertainty, and low fares used to stimulate demand can compress margins 1.

  • Labor costsmedium

    Salaries and benefits are the largest expense category, and labor conflicts or recruitment difficulties can raise costs 1.

  • Cybersecurity riskmedium

    The company depends heavily on technology, and cybersecurity incidents or system disruptions can affect operations 1.

Investment thesis

What would need to be true (bull case)

  • If revenue per unit keeps rising while capacity stays disciplined, margins could follow an upward path, supported by the improved product and new ancillary revenue 3.
  • Record third quarter demand and positive fourth quarter guidance suggest the transformation could produce durable gains if no major shocks occur 3.
  • The balance sheet and unencumbered assets could support shareholder returns and product investment if cash generation stays strong 3.

What would break the thesis

  • If fuel prices remain high and the company cannot fully pass costs to customers, margins could stay compressed 13.
  • Dependence on one aircraft manufacturer and delivery delays could limit capacity growth and reduce planning flexibility 1.
  • If demand cools because of economic conditions or competition, lower fares could weigh on unit revenue 1.

What to watch

  • Presentation of the multi-year financial framework at the Capital Markets Day in New York2027
  • Launch timing of the Southwest Icon lounge network and completion of Starlink installation2027

Products, market & competition

AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.

The business

In 2025 the company changed its fare structure, including bag fees for most fare products and new fares named Basic, Choice, Choice Preferred and Choice Extra 1. The Rapid Rewards loyalty program was reorganized, and in the third quarter of 2026 a new Platinum tier and Milestone Rewards were announced 3.

Segments

Freight

Freight revenues are much smaller than passenger revenues and declined slightly in 2025, showing that passenger transport remains the core activity 1.

Trends

  • Assigned and extra legroom seatingtailwind

    Since January 27, 2026 the company has offered assigned and extra legroom seating, which has supported passenger yield 12. If customers continue to pay for these options, revenues could remain elevated.

  • Fuel pricesheadwind

    Fuel costs rose sharply in 2026, and the company closed its hedging portfolio and said it does not intend to add new fuel derivatives 13. If prices stay high, margins could be pressed even as revenues grow.

  • Redeye flights and network expansionmixed

    Redeye flights and new destinations such as St. Thomas, Knoxville, Anchorage and Santa Rosa aim to improve aircraft utilization and connectivity 1. These expansions can add revenue but also bring new operating costs.

  • Loyalty program and partnershipstailwind

    Rapid Rewards and partnerships with international airlines such as TAP Air Portugal and LOT aim to attract new customers and extend the network 13. If these partnerships meet their goals, loyalty revenue could grow.

Competitive position

Competitive risk is described as intense, and the company notes that the airline industry is highly competitive, which limits its ability to pass costs on to customers 1. Competitors may offer lower fares, longer-haul flights or additional capacity 1.

The company differentiates itself through its point-to-point network, secondary airports and Hospitality culture, and in 2025 it was ranked first in The Wall Street Journal Best U.S. Airlines 1. Competitors using a hub-and-spoke model concentrate traffic in a few central airports 1.

  • Delta Air LinesDAL

    U.S. airline that, according to the sources, operates a hub-and-spoke model concentrating operations in a few central hubs.

  • American AirlinesAAL

    Major U.S. airline competing on domestic and medium-haul routes, mainly using hub-based connections.

  • United AirlinesUAL

    Major U.S. airline with an extensive hub-and-spoke network that competes with the company on many routes.

  • Low-cost carriers offering lower fares

    Low-cost carriers that offer reduced fares can exert pricing pressure, and prolonged periods of low fares can affect the ability to execute strategic initiatives.

News & filings

In the press

SEC filings

  • Current report02 Nov 2026
    Material agreement · Creation of a direct financial obligation · Other events · Financial statements and exhibits
  • Quarterly report22 Oct 2026
  • Current report21 Oct 2026
    Results of operations · Financial statements and exhibits
  • Current report12 Aug 2026
    Material agreement · Termination of a material agreement · Creation of a direct financial obligation · Financial statements and exhibits
  • Current report10 Aug 2026
    Departure or appointment of officers
  • Current report07 Aug 2026
    Departure or appointment of officers
  • Quarterly report23 Jul 2026
  • Current report22 Jul 2026
    Results of operations · Financial statements and exhibits
  • Current report19 May 2026
    Material agreement · Creation of a direct financial obligation
  • Current report11 May 2026
    Shareholder vote

Sources

  1. [1] Form 10-K, fiscal year ended 2025-12-31 · SEC / Southwest Airlines Co. · 05 Feb 2026
  2. [2] Form 10-Q, quarter ended 2026-09-30 · SEC / Southwest Airlines Co. · 22 Oct 2026
  3. [3] Form 8-K, results release (exhibit 99.1) · SEC / Southwest Airlines Co. · 21 Oct 2026

Figures computed by olivLaw from SEC filings and closing prices; the qualitative analysis is AI-generated from cited sources. Not investment advice.

Southwest Airlines Co. (LUV): stock, results, valuation and forecast · olivLaw