Southwest Airlines

LUV · NYSE · Industrials · Financials, fiscal 2016 to 2025

LUV · Last close · October 26, 2026

$42.85

Southwest Airlines' revenue rose 2.1% to $28.1 billion in fiscal 2025. Its operating margin was 1.5%, up from 1.2% a year earlier. Free cash flow was −$831 million. It paid out $2.9 billion in dividends and buybacks. The diluted share count fell 13.2%.

SOUTHWEST AIRLINES CO. Latest fiscal year ended December 31, 2025 10-K filed February 5, 2026 · 0000092380-26-000004 Updated October 22, 2026

Revenue

$28.1B

2.1%

Operating margin

1.5%

0.4 pts

Net income

$441M

5.2%

Free cash flow

−$831M

Return on capital

3.7%

0.5 pts

Market cap

$21.2B

Oct 26 close

P/E

20.9x

On $2.05 EPS, 4 qtrs

Operating margin is operating income as a share of revenue. Free cash flow is cash from operations minus capital spending. Return on capital is after-tax operating income as a share of the money invested in the business: debt plus equity, minus cash. Market cap is the last closing share price times the latest diluted share count, so it is approximate. P/E is the last close divided by diluted earnings per share over the last four quarters, or the latest fiscal year where the quarters aren't available; there is none when the company made a loss.

What Southwest Airlines does

Southwest Airlines is a passenger airline that flies within the United States and to nearby international destinations. As of December 31, 2025, it had 803 Boeing 737 aircraft and served 117 destinations in 42 states, the District of Columbia, Puerto Rico and ten near-international countries, including Mexico, Jamaica and Costa Rica. Unlike most major U.S. airlines, which send passengers through central hub cities, it mainly flies point-to-point, connecting cities directly.

Southwest is managed as a single operating segment that carries passengers and cargo. It sells several fare types, from Basic, generally its lowest, to higher-priced Choice Extra. In 2025 it began charging bag fees on most fares, and in January 2026 it began offering assigned and extra legroom seating. Members of its Rapid Rewards loyalty program earn points on the fares they buy. Southwest names other major domestic airlines, regional and new entrant airlines, charter operators, surface transportation, and alternatives such as videoconferencing as its main competitors.

Its low-cost approach relies on flying one aircraft type, the Boeing 737, and on using less congested secondary or downtown airports such as Dallas Love Field and Chicago Midway. It had 465 firm orders for Boeing MAX aircraft to be delivered through 2031. Pay and benefits were its largest cost, approximately 46.9 percent of operating expenses in 2025. As of December 31, 2025, it had 72,790 active full-time equivalent employees, and approximately 84 percent of its employees were represented by labor unions.

Its biggest risks, as it describes them

Its dependence on Boeing as the only maker of its aircraft, including long delays in deliveries of MAX aircraft.
Rising costs that wear away the low-cost structure it has relied on to compete.
Conflict with its employees, most of whom are represented by labor unions.
Disruptions at one of its core stations, the airports at the center of its network.
Failing to carry out its strategic plans effectively.

From Southwest Airlines's annual report on Form 10-K, filed February 5, 2026, in our words; the 10-K has the full description and every risk factor. Updated with each new 10-K.

Charts show fiscal years, from the 10-K filings.

Revenue and margins

Revenue

US$ billions, fiscal years

Margins

Percent of revenue

GrossOperatingNetFree cash flow

Net income and earnings per share

From fiscal 2016 to 2025, earnings per share fell 15.1% a year and net income 16.3% a year, while buybacks cut the share count by 12%.

Net income

US$ billions, fiscal years; loss years in red.

Diluted earnings per share

US$ per share, fiscal years, restated for any stock splits; loss years in red.

Returns on capital

Return on capital and on equity

Percent. Return on capital is after-tax operating income over the money invested in the business (debt plus equity, minus cash); return on equity is net income over shareholders' equity. Both use the average of opening and closing balances.

Return on capitalReturn on equity

Cash flow

Free cash flow

US$ billions. Cash from operations minus capital expenditure; negative years in red.

Payouts and share count

Dividends and buybacks

US$ billions, cash paid in each fiscal year

DividendsShare buybacks

Diluted share count

Weighted-average diluted shares, millions

Valuation

Two ways to value Southwest Airlines yourself, both starting from its filings: a discounted cash flow model and the price-to-earnings method.

What Southwest Airlines says to expect

Fourth quarter 2026: unit revenueFourth quarter 2026 RASM is expected to increase between 19% and 21% year-over-year
Fourth quarter 2026: unit costs excluding fuelFourth quarter 2026 CASM-X 1,2 is expected to increase between 4.0% and 4.5% year-over-year, which includes an expected 1.0 point headwind from the removal of six seats from the Boeing 737-700 fleet to enable extra legroom seating
Full year 2026: capacityEntered 2026 with a disciplined capacity plan and now expect full-year growth of approximately 1.2%, versus last updated guidance of approximately 1.5%
Full year 2026: net capital spendingExpect 2026 net capital spending 4 between $2.5 billion and $2.75 billion

The company's own words, from its earnings release (Form 8-K, Exhibit 99), filed October 21, 2026. They are its expectations, not ours, and not a forecast or price target from The Filing Desk. Replaced when the next release is out.

Discounted cash flow (DCF)

A discounted cash flow (DCF) model values a business as the cash it may generate in future, discounted back to today. The starting figures come from Southwest Airlines' 10-K (or, for net cash and shares, its latest 10-Q) and the assumptions are yours: start from one of three example scenarios, then change any figure to see what it implies for a share, and how that compares with the last share price.

Value per share on three example scenarios, from Southwest Airlines' cash from operations minus depreciation in fiscal 2025 (free cash flow before spending to grow: capital spending was 1.7 times depreciation, which holds its free cash flow down) of $282M, net cash of −$1.8B at December 31, 2025 and 558 million diluted shares, from its filings. The scenarios are fitted to Southwest Airlines: the base scenario's growth in years 1 to 5 is its revenue growth over the last 3 years, 5.6% a year; the cautious and optimistic ones are lower and higher, and growth in years 6 to 10 is halfway to the long-run rate. The base scenario's discount rate is 11% for a cyclical or higher-risk business (Passenger Airlines); the cautious and optimistic ones use a point more and a point less. Select one to load it into the calculator. These are the model's arithmetic on those assumptions, not a forecast or a price target.

From the filings

Starting free cash flow, US$ millions

Cash from operations minus depreciation in fiscal 2025: a rough guide to cash flow before spending to grow, for a company building heavily.

Net cash, US$ millions

Cash and short-term investments minus debt and finance leases at December 31, 2025. Negative means net debt.

Diluted shares, millions

Weighted-average diluted shares in fiscal 2025.

Your assumptions

Start from

Fitted to Southwest Airlines's own revenue growth, as above. Cautious: growth of 3% then 2.5% a year, 2% after year 10, a 12% discount rate. Base: growth of 5.5% then 4% a year, 2.5% after year 10, a 11% discount rate. Optimistic: growth of 8.5% then 6% a year, 3% after year 10, a 10% discount rate.

Free cash flow growth, years 1 to 5 (% a year)

Free cash flow growth, years 6 to 10 (% a year)

Growth after year 10 (% a year)Long-run growth forever after year 10. Usually close to inflation, and always below the discount rate.

Discount rate (% a year)The yearly return an investor wants for the risk. A higher rate gives a lower value.

Value per share on these assumptions

—

Last close, October 26, 2026: $42.85
Value on these assumptions, against the last close: —

Cash flows in years 1 to 10, valued today: —
Everything after year 10, valued today: —
Plus net cash: —
Share of value from after year 10: —

Projected free cash flow

US$ billions. Each column is one year's projected free cash flow, split into what it is worth today and the part removed by discounting.

Value todayRemoved by discounting

How the value changes with two assumptions

Value per share in US$, with the growth rates above. The highlighted cell matches the current assumptions.

How the model works. Free cash flow grows at the first rate for five years and the second rate for five more, and each year is discounted at the discount rate. Everything after year 10 is valued as year-10 cash flow × (1 + growth after year 10) ÷ (discount rate − growth after year 10), discounted back ten years. Net cash is added and the total is divided by diluted shares. The result depends entirely on the assumptions. It is not a forecast, a price target or a recommendation. The last close is the consolidated US closing price, from Databento.

Price-to-earnings (P/E) method

Another common way to value a company is to multiply its earnings per share by a price-to-earnings (P/E) multiple: the number of years of today's earnings an investor pays for a share. A higher multiple usually means investors expect earnings to grow. Choose a multiple, for example from similar companies, to see the value it gives.

Value per share on three example scenarios, from Southwest Airlines' earnings per share of $2.05 (over the last four quarters). Each grows earnings for a year at the cash flow scenarios' rates and applies a multiple to next year's earnings: 20.9×, the middle of Southwest Airlines' own P/E today, its peers' median and its sector's median (Southwest Airlines' own P/E today) for the base scenario, 20% less and more for the cautious and optimistic ones. The price is brought back a year at 12%, 11% and 10%. Select one to load it into the calculator. These are the model's arithmetic on those assumptions, not a forecast or a price target.

Earnings per share, US$

Diluted earnings per share over the four quarters to September 30, 2026, from the 10-Qs and 10-K.

P/E multiple

P/E today is the last close divided by the latest earnings per share, the four quarters' where available. Peers: United Airlines, Delta Air Lines.

Earnings growth in the years ahead (% a year) Starts at Southwest Airlines' revenue growth over the last 3 years, 5.6% a year, as the base scenario does.

Earnings per share in the years ahead, US$

Year 1Year 2Year 3Year 4Year 5

Type your own estimate for any year; the years after it carry on at the growth rate.

Apply the multiple to earnings

A multiple on a future year's earnings gives the price then, brought back to today at the discount rate below.

Discount rate (% a year) The yearly return an investor wants for the risk, as in the cash flow model.

Value per share today at this multiple

—

Last close, October 26, 2026: $42.85
Value at this multiple, against the last close: —
Southwest Airlines' P/E at the last close: 20.9×

Company	Last close	Earnings per share	P/E today
Southwest AirlinesLUV	$42.85	$2.05	20.9×
Delta Air LinesDAL	$79.16	$5.01	15.8×
United AirlinesUAL	$100.69	$10.92	9.2×

How the P/E method works. Value per share is earnings per share times the multiple. On a future year's earnings, that gives the price in that year, which is brought back to today at the discount rate: price ÷ (1 + discount rate) for each year ahead. It is quick and easy to compare across companies, but it ignores debt and cash, and earnings can swing with one-off gains and charges, so a multiple says most about steady, profitable businesses. Like the cash flow model, the result depends entirely on the assumptions you choose. It is not a forecast, a price target or a recommendation.

Balance sheet

Fiscal year end	FY21	FY22	FY23	FY24	FY25
Cash and short-term investments	15.5	12.3	11.5	8.7	3.2
Debt incl. finance leases	10.8	8.3	8.1	6.8	5.0
Net debt (negative means net cash)	−4.7	−4.0	−3.4	−1.9	1.8
Net debt to EBITDA	−1.6x	−1.7x	−1.9x	−1.0x	0.9x
Debt to equity	1.0x	0.8x	0.8x	0.7x	0.6x
Interest coverage	5.1x	3.0x	0.9x	1.3x	2.6x
Current ratio	2.0x	1.4x	1.1x	0.9x	0.5x
Quick ratio	2.0x	1.4x	1.1x	0.9x	0.5x

US$ billions unless stated, at each fiscal year end. Net debt to EBITDA is debt minus cash, divided by operating income before depreciation and amortization: roughly how many years of those earnings the net debt equals. Debt to equity is debt as a multiple of shareholders' equity. Interest coverage is operating income divided by interest expense. The current ratio is current assets over current liabilities; the quick ratio leaves out inventory.

Insider trades

Over the 12 months between October 27, 2025 and October 26, 2026, no insider bought Southwest Airlines shares on the open market, and 2 insiders sold $306,534.

Date	Insider	Trade	Shares	Price	Value	Filing
Apr 7, 2026	Lisa M AthertonDirector	Sold	118	$37.95	$4,478	Form 4
Dec 5, 2025	Justin JonesEVP Operations	Sold	8,085	$37.36	$302,056	Form 4

Open-market purchases and sales by officers, directors and 10% owners, from their Form 4 filings with the SEC: one row per person, day and filing, at the day's average price. Grants, option exercises and shares withheld for tax aren't counted. Insiders buy and sell for many reasons, such as taxes, spreading their savings or a plan set up months earlier, so a trade on its own says little about where a company is heading. For information only, not investment advice. Insider trades at all companies

Piotroski F-score

The F-score counts how many of nine simple tests of profitability, funding and efficiency a company passed in a year (Piotroski, 2000). The more tests passed, the stronger the year: 8 or 9 is strong, 0 to 2 weak. Companies that report no gross profit are scored on the other eight.

Test	FY23	FY24	FY25
Net income is positive	Pass	Pass	Pass
Cash from operations is positive	Pass	Pass	Pass
Return on assets rose	Fail	Fail	Pass
Cash from operations exceeds net income	Pass	Fail	Pass
Debt fell relative to assets	Pass	Pass	Pass
Current ratio rose	Fail	Fail	Fail
Share count didn't rise	Pass	Fail	Pass
Gross margin rose	—	—	—
Revenue rose relative to assets	Pass	Pass	Pass
F-score	6 of 8	4 of 8	7 of 8
Accruals ratio	−7.5%	0.0%	−4.5%

The accruals ratio is net income minus cash from operations, over average total assets.

Compare

Put Southwest Airlines side by side with any other company we cover: revenue, growth, margins, cash flow and returns, with ten years of charts.

Similar companies

Company	Year	Revenue growth	Operating margin	Free cash flow margin	Return on capital	Net debt to EBITDA	F-score	Compare
Southwest Airlines	FY25	2.1%	1.5%	−3.0%	3.7%	0.9x	7
American Airlines Group	FY25	0.8%	2.7%	−1.2%	5.7%	5.3x	5	Compare
Alaska Air Group	FY25	21.3%	2.1%	6.6%	2.9%	3.1x	5	Compare
United Airlines	FY25	3.5%	8.0%	4.3%	15.3%	1.2x	6	Compare
Delta Air Lines	FY25	2.8%	9.2%	6.1%	15.9%	1.2x	7	Compare

Each company's latest fiscal year. Fiscal years end in different months, so the periods don't line up exactly. Free cash flow margin is free cash flow as a share of revenue. Net debt to EBITDA is explained under the balance sheet, and the F-score above.

10 years of figures

Fiscal year	FY16	FY17	FY18	FY19	FY20	FY21	FY22	FY23	FY24	FY25
Income statement
Revenue	20.4	21.2	22.0	22.4	9.0	15.8	23.8	26.1	27.5	28.1
Revenue growth	3.0%	3.6%	3.8%	2.1%	−59.7%	74.5%	50.8%	9.6%	5.3%	2.1%
Gross profit	—	—	—	—	—	—	—	—	—	—
Research and development	—	—	—	—	—	—	—	—	—	—
Operating income	3.5	3.4	3.2	3.0	−3.8	1.7	1.0	0.2	0.3	0.4
Net income	2.2	3.4	2.5	2.3	−3.1	1.0	0.5	0.5	0.5	0.4
Diluted EPS (US$)	3.45	5.57	4.29	4.27	−5.44	1.61	0.87	0.76	0.76	0.79
Diluted shares (millions)	633	603	574	539	565	609	642	640	643	558
Cash flow
Cash from operations	4.3	3.9	4.9	4.0	−1.1	2.3	3.8	3.2	0.5	1.8
Capital expenditure	2.0	2.1	1.9	1.0	0.5	0.5	3.9	3.5	2.1	2.7
Free cash flow	2.3	1.8	3.0	3.0	−1.6	1.8	−0.1	−0.4	−1.6	−0.8
Dividends paid	0.2	0.3	0.3	0.4	0.2	0.0	0.0	0.4	0.4	0.4
Share buybacks	1.8	1.6	2.0	2.0	0.5	0.0	0.0	0.0	0.2	2.5
Acquisitions	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Stock-based compensation	0.0	0.0	0.0	0.1	0.0	0.1	0.1	0.1	0.0	0.1
Balance sheet at fiscal year end
Cash and short-term investments	3.3	3.3	3.7	4.1	13.3	15.5	12.3	11.5	8.7	3.2
Debt incl. finance leases	3.4	3.7	3.4	2.7	10.4	10.8	8.3	8.1	6.8	5.0
Total assets	23.3	25.1	26.2	25.9	34.6	36.3	35.4	36.5	33.8	29.1
Total liabilities	15.5	15.5	16.4	16.1	25.7	25.9	24.7	26.0	23.4	21.1
Shareholders' equity	7.8	9.6	9.9	9.8	8.9	10.4	10.7	10.5	10.3	8.0
Margins and ratios
Gross margin	—	—	—	—	—	—	—	—	—	—
Operating margin	17.2%	16.1%	14.6%	13.2%	−42.2%	10.9%	4.3%	0.9%	1.2%	1.5%
Net margin	10.7%	15.9%	11.2%	10.3%	−34.0%	6.2%	2.3%	1.8%	1.7%	1.6%
Free cash flow margin	11.0%	8.5%	13.5%	13.2%	−18.1%	11.5%	−0.6%	−1.4%	−5.8%	−3.0%
Return on capital	30.2%	38.1%	25.5%	25.6%	−42.0%	21.9%	12.2%	2.4%	3.2%	3.7%
Return on equity	30.0%	38.5%	25.3%	23.4%	−32.9%	10.1%	5.1%	4.4%	4.5%	4.8%
Return on assets	9.8%	13.9%	9.6%	8.8%	−10.2%	2.8%	1.5%	1.3%	1.3%	1.4%
Net debt to EBITDA	0.0x	0.1x	−0.1x	−0.3x	—	−1.6x	−1.7x	−1.9x	−1.0x	0.9x

US$ billions unless stated. Where a later 10-K restated a year, the latest filed figure is shown. Download all figures (CSV, US$ millions)

Source: Southwest Airlines' Form 10-K filings, from SEC EDGAR. For information only, not investment advice. The Filing Desk is not affiliated with Southwest Airlines.