Southwest Airlines Co. (LUV) is scheduled to report first-quarter 2025 results on April 24, 2025. 

LUV has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters, missed the mark in the remaining quarter, the average beat being 58.64%. (See the Zacks Earnings Calendar to stay ahead of market-making news).

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Let’s see how things have shaped up for LUV this earnings season.

Factors Likely to Have Influenced LUV’s Q1 Performance 

The Zacks Consensus Estimate for Southwest Airlines Airlines' first-quarter 2025 revenues is pegged at $6.40 billion, indicating 1.16% growth year over year. The uptick is likely owing to LUV's revenue management actions, which are likely to have boosted revenue growth and expanded the customer base by retaining existing customers and attracting new ones. LUV continues to work on its revenue management actions, which include network optimization and capacity moderation, as well as marketing and distribution evolution. LUV remains focused on boosting efficiencies to offset overall inflationary cost pressures and achieve its cost initiative. 

Low fuel costs due to the downtrend in oil prices are likely to have boosted the bottom-line performance in the to-be-reported quarter. The decline in oil prices bodes well for LUV's bottom-line growth because fuel expenses are a significant input cost for the airline space. Economic fuel cost per gallon for the first quarter is now expected to be in the range of $2.35 to $2.45 (prior view: $2.50 to $2.60).  

The Zacks Consensus Estimate for first-quarter 2025 loss is currently pegged at 18 cents per share, wider than the loss of 16 cents in the past 60 days. However, the consensus mark implies a 50% northward movement from the year-ago actual. 

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We expect tariff-induced economic uncertainties and the resultant reduction in consumer and corporate confidence to have caused a slowdown in domestic air travel demand. Higher-than-expected completion factor, lesser government travel, and a higher-than-expected impact from the California wildfires have acted as other headwinds too. Labor costs are also likely to have been high, hurting bottom-line performance in the March quarter. 

What Our Model Says About LUV

Our proven model does not conclusively predict an earnings beat for Southwest Airlines this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

LUV has an Earnings ESP of -16.67% and a Zacks Rank #3 at present. 

Highlights of Q4

Southwest Airlines reported fourth-quarter 2024 earnings of 56 cents per share, which outpaced the Zacks Consensus Estimate of 45 cents and improved 51.5% from the year-ago reported quarter. 

Revenues of $6.93 billion missed the Zacks Consensus Estimate of $6.95 billion. The top line, however, improved 1.6% year over year on the back of the successful execution of tactical actions, which includeds the maturation of the revenue management system and techniques, marketing and distribution evolution, and network optimization, as well as continued demand strength. Close-in bookings performed better than expectations in December, mainly during the holiday period. 

Stocks to Consider

Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.  

C.H. Robinson CHRW has an Earnings ESP of +1.37% and a Zacks Rank #3 at present. CHRW is scheduled to report first-quarter 2025 earnings on April 30. You can seethe complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for first-quarter 2025 earnings has been revised 1.94% upward in the past 90 days. CHRW’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 21.7%.

Expeditors International of Washington EXPD has an Earnings ESP of +3.76% and a Zacks Rank #2 at present. EXPD is scheduled to report first-quarter 2025 earnings on May 6.

The Zacks Consensus Estimate for first-quarter 2025 earnings has been revised 1.94% upward in the past 90 days. EXPD’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 11.6%.

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Southwest Airlines Co. (LUV) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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