Free Research Report as Southwest Airlines Delivered Record First Quarter Operating Revenues and Earnings

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LONDON, UK / ACCESSWIRE / May 17, 2018 / If you want access to our free earnings report on Southwest Airlines Co. (LUV), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=LUV. The Company reported its first quarter fiscal 2018 operating and financial results on April 26, 2018. The airline surpassed earnings estimates. Register today and get access to over 1,000 Free Research Reports by joining our site below:

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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Southwest Airlines most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:

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Earnings Highlights and Summary

Southwest Airlines' total operating revenues increased 1.9% to a first quarter record of $4.94 billion on a y-o-y basis, driven largely by first quarter record passenger revenues of $4.59 billion. The Company's revenue numbers fell short of analysts' estimates of $5.02 billion.

During Q1 2018, Southwest Airlines' total operating expenses increased 1.9% to $4.3 billion. The Company's total operating cost per available seat mile (CASM) increased 0.1% to $0.1158 compared to the first quarter of 2017.

The Company's profit sharing expenses were $102 million in the reported quarter compared to $99 million in the prior year's same quarter. Excluding fuel and oil expenses, profit sharing expenses, and special items, Southwest Airlines' operating expenses rose 1.4% y-o-y, and declined 0.3% on a unit basis.

During Q1 2018, Southwest Airlines' operating income was $616 million compared to $606 million in Q1 2017. Excluding special items, the Company's operating income was $584 million in the reported quarter versus $574 million in the prior year's comparable quarter.

Southwest Airlines' other expenses were $14 million in Q1 2018 compared to $74 million in Q1 2017. The $60 million difference resulted primarily from other losses of $4 million recognized in the reported quarter compared to $63 million in the prior year's corresponding quarter.

For Q1 2018, Southwest Airlines' net income was $463 million, or a first quarter record of $0.79 per diluted share, compared to $339 million, or $0.55 per diluted share, in Q1 2017. Excluding special items, the Company's net income was $438 million, or $0.75 per diluted share, in the reported quarter compared to $359 million, or $0.58 per diluted share, in the year earlier same quarter. Southwest Airlines' earnings beat Wall Street's estimates of $0.74 per share.

Operating Performance

During Q1 2018, Southwest Airlines' operating revenue per available seat mile (RASM) was $0.1323. The Company's strong travel demand resulted in a first quarter record load factor of 81.5%. Southwest Airlines' passenger revenue yield decreased 2.8% on a y-o-y basis in Q1 2018, primarily due to the competitive yield environment and the impact from operating a sub-optimal flight schedule as a result of a temporarily reduced fleet size due to the retirement of the Boeing 737-300 Classic fleet in FY17.

For Q1 2018, Southwest Airlines' economic fuel costs were $2.09 per gallon, including a premium expense of $0.07 per gallon and favorable cash settlements from fuel derivative contracts of $0.05 per gallon; compared to $2.03 per gallon in Q1 2017, which included a premium expense of $0.07 per gallon and unfavorable cash settlements from fuel derivative contracts of $0.29 per gallon. The Company's ASMs per gallon, or fuel efficiency, improved 1.3% on a y-o-y basis in Q1 2018, driven primarily by the retirement of the Classic aircraft and the addition of the more fuel-efficient 737 MAX 8 aircraft.

Based on the Company's existing fuel derivative contracts and market prices as of April 20, 2018, economic fuel costs are estimated to be approximately $2.20 per gallon for Q2 2018, including a premium expense of $0.06 per gallon and favorable cash settlements from fuel derivative contracts of estimated $0.07 per gallon; compared to $1.99 per gallon in Q2 2017.

Liquidity and Capital Deployment

As of March 31, 2018, Southwest Airlines had cash and short-term investments of approximately $3.2 billion, and a fully available unsecured revolving credit line of $1 billion. For the reported quarter, the Company's net cash provided by operations was $1.0 billion; capital expenditure was $409 million; and free cash flow was $708 million. Southwest Airlines repaid debt and capital lease obligations of $82 million during Q1 2018 and expects to repay debt and capital lease obligations of approximately $254 million during the remainder of 2018.

During Q1 2018, Southwest Airlines returned $648 million to its shareholders, through the repurchase of $500 million in its common stock and the payment of $148 million in dividends. The Company launched and completed a $500 million accelerated share repurchase (ASR) program during the first quarter, which equated to approximately 8.72 million shares repurchased.

Due to revisions to its future fleet order book with Boeing, the Company now estimates capital expenditure to be in the range of $2.0 billion to $2.1 billion for FY18.

Fleet and Capacity

Southwest Airlines ended Q1 2018 with 717 aircraft in its fleet. This reflects the delivery of nine new Boeing 737-800 aircraft, one new Boeing 737 MAX 8 aircraft, and one pre-owned Boeing 737-700 aircraft during the reported quarter.

In March 2018, Southwest Airlines revised its future firm order delivery schedule with Boeing to support future fleet modernization. The Company exercised 40 737 MAX 8 options which adds 10 additional firm orders in each year, from 2019 through 2022. Southwest Airlines expects to end 2018 with 752 aircraft in its fleet, based on the current aircraft delivery schedule.

Outlook

Southwest Airlines is expecting ASM growth to be in the low 5% y-o-y range for FY18, with an ASM growth in the band of 3.5% to 4% y-o-y for Q2 2018, and an ASM growth in the low 7% y-o-y range for H2 2018.

Southwest Airlines expects RASM to decrease in the band of 1% to 3% for Q2 2018 compared to RASM of $0.1427, as recast, in Q2 2017.

Stock Performance Snapshot

May 16, 2018 - At Wednesday's closing bell, Southwest Airlines' stock climbed 2.53%, ending the trading session at $53.01.

Volume traded for the day: 5.82 million shares, which was above the 3-month average volume of 5.12 million shares.

After yesterday's close, Southwest Airlines' market cap was at $31.12 billion.

Price to Earnings (P/E) ratio was at 14.46.

The stock has a dividend yield of 0.94%.

The stock is part of the Services sector, categorized under the Regional Airlines industry. This sector was up 0.8% at the end of the session.

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