Southwest Airlines Reports Upbeat Q4 Results; Revenues Rise 151%

Shares of low-cost carrier Southwest Airlines Co. (NYSE: LUV) closed over 2% down on Thursday, even after the company reported excellent results for the fourth quarter of 2021. However, the shares gained 0.2% in the extended trading session to end the day at $42.91.

Adjusted earnings came in at $0.14 per share, compared to a loss of $1.29 per share in the year-ago quarter and the Street’s estimate of $0.07 per share.

Revenues increased 150.9% year-over-year to $5.1 billion, just beating analysts’ expectations of $5.01 billion.

Passenger revenues jumped 174% to $4.6 billion, freight revenues rose 9.3% to $47 million, and other revenues grew 45.6% to $447 million.

Commenting on the results, Southwest’s Chairman and CEO, Gary C. Kelly, said, “We ended 2021 on a high note with our first quarterly profit, excluding special items, since fourth quarter 2019 before the COVID-19 pandemic began. Leisure travel demand was strong, particularly during the holidays, and business revenues continued to recover compared with 2019 levels.”

Bob Jordan, Executive Vice-President and incoming CEO of Southwest, said, “With the Omicron variant and weather impacting our results, we expect losses in January and February and a return to profitability in March 2022. Based on our current plan, while we no longer expect to be profitable in first quarter, we expect to be profitable for the remaining three quarters of this year, and for full year 2022.”

Guidance

For the first quarter of 2022, the company expects revenues to fall by 10% to 15% compared with the first quarter of 2019. Business revenues are expected to be 45% to 55% lower than the first quarter of 2019.

Further, the Omicron variant and softness in business travel demand is likely to bring down revenues by $330 million in January and February.

About Southwest Airlines

One of the major airline companies of the U.S., Texas-based Southwest serves 121 destinations in the U.S. and 10 other countries. In 2021, its flights flew to over 100 destinations in 42 states, Puerto Rico, Mexico, Central America, and the Caribbean.

Price Target

Overall, the stock has a Moderate Buy consensus rating based on 8 Buys, 5 Holds and 1 Sell. The average Southwest Airlines stock forecast of $54.54 implies 27.4% upside potential. Shares have lost 17% over the past six months.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), the world’s biggest website usage monitoring service, offers insight into Southwest’s performance.

According to the tool, compared to the previous year, LUV’s website traffic registered a 13.4% rise in global visits in December. Moreover, the website traffic has increased 11.4% year-to-date against the same period last year.

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