Southwest Airlines Co. (LUV, Financial) has released updated financial guidance for the fourth quarter of 2024, highlighting a positive outlook driven by robust travel demand and strategic initiatives. The company anticipates a year-over-year increase in unit revenues ranging from 5.5% to 7.0%, despite a projected 4% decrease in capacity.
This optimistic forecast is attributed to resilient leisure travel demand and the successful implementation of tactical actions aimed at enhancing network optimization, capacity rationalization, and revenue management techniques. The company has observed better-than-expected results from these initiatives, leading to an improved revenue outlook for the quarter.
Southwest Airlines is also advancing its fleet strategy, which includes plans for approximately 20 Boeing 737-8 aircraft deliveries and the retirement of 40 aircraft in 2024. The company aims to leverage its fleet and order book through aircraft sales and sale-leaseback transactions, supporting a balanced capital allocation approach.
In line with its capital strategy, Southwest Airlines intends to launch a $750 million accelerated share repurchase (ASR) program in the first quarter of 2025, following the completion of a $250 million ASR announced in October 2024. This initiative is part of a broader $2.5 billion share repurchase program authorized by the company's Board of Directors.
Looking ahead, Southwest Airlines remains confident in its 'Southwest. Even Better.' plan, unveiled at Investor Day in September 2024, and expects strong revenue trends to continue into 2025. The company is encouraged by recent revenue trends and forward bookings, including holiday travel, which bolster its strategic outlook.
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