2024 Vision: Southwest Airlines Outlines Strategic Plan for Growth and Profitability
Southwest Airlines (NYSE: LUV) reported its financial results for the fourth quarter and full year 2023, indicating a net loss of $219 million in Q4 but a full-year net income of $498 million. The company achieved record operating revenues of $6.8 billion in Q4 and $26.1 billion for the full year. Despite challenges, Southwest Airlines maintained a liquidity of $12.5 billion, surpassing its outstanding debt of $8.0 billion. CEO Bob Jordan highlighted achievements in 2023, including network restoration, labor agreements, and a strong investment-grade balance sheet.
Financial Highlights:
- Q4 net loss: $219 million, or $0.37 loss per diluted share.
- Q4 net income (excluding special items): $233 million, or $0.37 per diluted share.
- Full-year net income: $498 million, or $0.81 per diluted share.
- Full-year net income (excluding special items): $986 million, or $1.57 per diluted share.
- Record operating revenues: $6.8 billion in Q4 and $26.1 billion for the full year.
- Liquidity: $12.5 billion, exceeding outstanding debt of $8.0 billion.
CEO Statement: Bob Jordan emphasized significant progress in 2023, acknowledging achievements in network restoration, labor agreements, and maintaining an investment-grade balance sheet. Despite a net loss in Q4, Jordan expressed confidence in the company’s 2024 plan, focusing on profitability, cost control, and strategic initiatives.
2024 Outlook:
- Expected double-digit year-over-year operating revenue growth and operating margin expansion.
- Initiatives contributing to approximately $1.5 billion in incremental pre-tax profits.
- Anticipated growth in available seat miles (ASM) by approximately 6% in 2024.
- Focus on regaining efficiencies and managing costs amid inflationary pressures.
Fuel Costs and Hedging:
- Q4 2023 economic fuel costs: $3.00 per gallon.
- Full-year 2023 economic fuel costs: $2.89 per gallon.
- Fuel efficiency improved by 4.0% year-over-year in Q4 2023.
- Fair market value of fuel derivative contracts as of January 17, 2024: Asset of $252 million.
Costs and Expenses:
- Operating expenses increased 9.5% year-over-year in Q4 2023.
- Q4 2023 CASM-X decreased by 18.1% year-over-year.
- Q4 2023 profit-sharing expense accrued: $118 million.
Capacity, Fleet, and Capital Spending:
- Q4 2023 capacity increased 21.4% year-over-year.
- Full-year 2023 capacity increased 14.7% year-over-year.
- Estimated 2024 capital spending: $3.5 billion to $4.0 billion.
- Planning for approximately 79 MAX aircraft deliveries in 2024, with 847 aircraft in the fleet by year-end.
