Southwest Airlines Co. (LUV Quick QuoteLUV - Free Report) reported second-quarter 2024 earnings of 58 cents per share, which outpaced the Zacks Consensus Estimate of 50 cents but declined 46.7% from the year-ago reported quarter.

Revenues of $7.354 billion surpassed the Zacks Consensus Estimate of $7.323 billion and improved 4.5% year over year. The uptick was owing to solid demand trends, quarterly record passengers carried, higher passenger revenues, and ancillary revenues. Further, managed business revenues continued to improve on a year-over-year basis.

Operating Statistics

Airline traffic, measured in revenue passenger miles, surged 7.6% year over year to 38.22 billion in the quarter under review. Capacity or available seat miles (ASMs) climbed 8.6% year over year to 46.25 billion.As traffic failed to outpace capacity expansion, load factor (percentage of seat occupancy) fell 0.8 percentage points to 82.6%.

Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) fell 3.6% year over year to 14.51 cents.

Revenue per available seat mile (RASM) fell 3.8% to 15.90 cents.

Operating Expenses & Income

In the second quarter, Southwest Airlines incurred an operating income (as reported) of $398 million compared with $795 million in the year-ago reported quarter. On an adjusted basis (excluding special items), the company reported operating income of $405 million compared with $891 million in the year-ago reported quarter.

Total adjusted operating expenses (excluding profit sharing, special items, fuel and oil expenses) increased 15.1%.

Fuel cost per gallon (inclusive of fuel tax: economic) grew 6.2% to $2.76.

Consolidated unit cost or cost per available seat mile (CASM) excluding fuel, oil and profit-sharing expenses, and special items grew 6% year over year.

Liquidity

Southwest Airlines ended the second quarter with cash and cash equivalents of $8.142 billion compared with $8.367 billion at the end of the prior quarter. As of Jun 30, 2024, the company had long-term debt (less current maturities) of $5.065 billion compared with $7.974 billion at the prior-quarter end.

LUV utilized $23 million of cash in operating activities in the reported quarter, while CapEx was $494 million.

Q3 & Full-Year Outlook

For third-quarter 2024, ASMs are estimated to improve 2% from the year-ago reported figure. Economic fuel costs per gallonare expected to be in the range of $2.60-$2.70. RASM is anticipated to be flat to down 2% from the year-ago reported figure.LUV expects CASM, excluding fuel, oil and profit-sharing expenses, and special items, to increase 11-13% in the third quarter from the comparable period in 2023. Interest expenses are expected to be $62 million in the third quarter.

For 2024, LUV expects capacity to improve 4% from the 2023 level. Economic fuel costs per gallon are estimated to be between $2.70 and $2.80. CASM, excluding fuel, oil and profit-sharing expenses, and special items, is still anticipated to increase 7-8% in 2024 from 2023. Interest expenses are expected to be $252 million in 2024. The effective tax rate is expected to be 24% in 2024. Capital expenditures are anticipated to be around $2.5 billion for 2024.

Zacks Rank and Price Performance

Currently, Southwest Airlines carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

So far this year, shares of LUV have plunged 7.9% against the industry’s growth of 7.8%.

Image Source: Zacks Investment Research

Performances of Other Transportation Companies

Delta Air Lines (DAL Quick QuoteDAL - Free Report) reported second-quarter 2024 earnings (excluding 35 cents from non-recurring items) of $2.36 per share, which marginally missed the Zacks Consensus Estimate of $2.37. Earnings decreased 11.9% on a year-over-year basis. Apart from high costs, the carrier blamed the discounting pressure at the low end of the market, which hurt its pricing power, for the disappointing performance.

Revenues of $16.65 billion surpassed the Zacks Consensus Estimate of $16.25 billion and increased 6.9% year over year, driven by upbeat air travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $15.41 billion, up 5.4% year over year.

J.B. Hunt Transport Services, Inc. (JBHT Quick QuoteJBHT - Free Report) reported disappointing second-quarter 2024 results wherein both earnings and revenues lagged the Zacks Consensus Estimate.

JBHT’s earnings of $1.32 per share missed the Zacks Consensus Estimate of $1.51 and declined 27% year over year.

JBHT’stotal operating revenues of $2.93 billionmissed the Zacks Consensus Estimate of $3.03 billion and fell 7% year over year. Total operating revenues, excluding fuel surcharge revenue, fell 6% year over year.The downfall was owing to a 5% decrease in gross revenue per load in Intermodal (JBI) and a decline in load volume of 25% in Integrated Capacity Solutions (ICS), 9% in Truckload (JBT), and 9% in Dedicated Contract Services (DCS). These were partially offset by the 5% revenue growth of Final Mile Services (FMS), primarily driven by new contracts implemented over the past year, and a 5% increase in revenue per load in ICS.

United Airlines Holdings, Inc. (UAL Quick QuoteUAL - Free Report) reported second-quarter 2024 earnings per share (excluding 18 cents from non-recurring items) of $4.14, which surpassed the Zacks Consensus Estimate of $3.97. Earnings decreased 17.7% on a year-over-year basis.

Operating revenues of $14.98 billion missed the Zacks Consensus Estimate of $15.13 billion. The top line increased 5.7% year over year due to upbeat air-travel demand. This was driven by a 5.2% rise in passenger revenues (which accounted for 91.2% of the top line) to $13.680 billion. Almost 44,375 passengers traveled on UAL flights in the second quarter, up 5.8% year over year.