Southwest posts Q1 losses of $149 million amid uncertainty for rest of 2025

On April 23, 2025, Southwest Airlines published its first quarter financial results for 2025 (1Q25), showing a substantial improvement in its performance during the period January to March 2025. However, notwithstanding its buoyant trading performance, the airline is warning of turbulent times ahead as the US economy grapples with economic uncertainty amid a global trade war.

In 1Q25, Southwest Airlines‘ revenues reached $6.4 billion, a figure which includes passenger revenues of $5.8 billion. This figure represents a year-on-year increase in total revenues of 1.6%, which is a record for the airline. Consequently, the carrier’s operating losses were reported at $223 million, which, when excluding special items, reduced further to $128 million. The budget airline’s net losses also saw an improvement from $231 million in 1Q24 to $149 million in 1Q25.

Among the other headline figures, operating expenses also dropped by 1.1% versus 1Q24, despite the carrier having to spend $6.6 billion, which included severance-related costs of $62 million, to maintain operational integrity during the period. Southwest was forced to announce the first employee layoffs in its 57-year history in February 2025, which the company hopes will invoke savings of $210 million in 2025 and $300 million in 2026.

Markus Mainka / ShutterstockHowever, it was not all plain sailing for the low-cost megacarrier in the period, with its operational performance falling way short of the same quarter the previous year. This included carrying 29.9 million revenue passengers, a figure that is down 8.8% on 1Q24, and load factors dropping by 4.4% to 73.9%. The airline operated 331,886 revenue flights compared to 349,979 during the same quarter the previous year. At the end of 1Q25, the airline had a fleet of 800 exclusively Boeing 737 family aircraft, compared to 819 at the end of 1Q24, a drop of 2.3%.

The average passenger fare rose from $173.76 to $193.75, with passenger revenue yield per revenue passenger mile (RPM) rising to 18.97¢ over 17.26¢ in 1Q24. This metric was supported by significantly lower fuel costs compared to the same quarter in 2024, with its average fuel costs per gallon (including tax) rounding out at $2.49, a drop of 14.7% over 1Q25. While the company’s cost per available seat mile (CASM) was reported as 16.05¢, just 0.9% higher than in 1Q24, its CASM excluding fuel and oil costs (CASM-X) was 6.2% higher than in 1Q24, at 13.04¢.

First quarter 2025 capital expenditures were $501 million, driven primarily by aircraft-related capital spending, as well as technology, facilities, and operational investments. Capital expenditures for the quarter were offset by proceeds of $24 million from the sale-leaseback of one aircraft.

Markus Mainka / ShutterstockThe carrier’s first quarter 2025 overall network capacity decreased 1.9% year-on-year which was in line with the company’s previous guidance. The company received 11 new Boeing 737 MAX 8 aircraft during the first quarter of 2025 and retired 14 older planes, including 12 Boeing 737-700 aircraft and two 737-800 aircraft.

At an investors’ meeting on April 23, 2025, the President and Chief Executive Officer (CEO) of Southwest Airlines, Bob Jordan, highlighted to those attending that the airline beat its previously adjusted guidance of operating expenses, adding that it was on track to achieve the increased cost-reduction plan targets that it announced earlier in March 2025.

“We ran a stellar operation in the first quarter, leading the industry in on-time performance and improving on almost every operating metric, year-over-year. We are seeing positive results on recently rolled out initiatives, including the launch of Expedia as a new distribution channel and the further optimization of our loyalty program. We expect to introduce basic economy and bag fees for most fare products next month and remain on track to begin selling assigned and extra legroom seats in the third quarter of 2025 for operations beginning in the first quarter of 2026.”

Evolving in an uncertain market

This latest set of results will come as some relief to the board and shareholders of Southwest after what has been a year of mixed fortunes for the carrier. The airline has been undergoing a period of substantial change over the past twelve months, including a proxy war with an activist shareholder. However, with the Trump administration instigating economic uncertainty in the US and talk of a recession in the country around the corner, Southwest is remaining cautious about the remainder of 2025 and beyond.

It is widely known that US domestic air travel has already dropped substantially during the first few months of 2025, with other US majors such as Delta Air Lines publicly warning of difficult times ahead. Consequently, Southwest was warned about the current uncertainty in the “macroeconomic environment,” which could potentially impact future travel demand further. The airline has therefore decided against reiterating its 2025 or 2026 guidance at the current time.

VDB Photos / ShutterstockElsewhere, Southwest has been instigating several other operational changes, which it says will increase its overall efficiency and financial position. In recent months, the carrier has controversially removed its one free checked bag policy for all passengers effective May 28, 2025, and has ended its long-standing fuel hedging policy. However, the carrier has rolled out a plan to refurbish its aircraft cabins with more premium seats and include popular amenities such as in-seat charging. It has also introduced assigned seating network-wide.

Jordan says that these initiatives being introduced by Southwest should improve its commercial and financial performance, which in turn will benefit customers and shareholders alike.

“We remain well-positioned with and committed to a strong and efficient investment-grade balance sheet and have a valuable contractual order book with Boeing that offers flexibility,” Jordan concludes.

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