Southwest Airlines has reported a second-quarter net income of $213 million, a 42% decrease on figures recorded during the same period of 2024.
The Texas-based carrier reported an operating revenue of $7.24bn in the quarter through June, compared with $7.35bn a year earlier. Excluding special items, net income rose to $230 million during the second quarter, or $0.43 per diluted share.
The Texas-based carrier returned $1.6bn to shareholders during the period through a combination of share repurchases and dividends. The airline’s board also authorised a new $2bn share buyback program, expected to be completed over the next two years.
Southwest launched checked bag fees during the quarter, with financial benefits exceeding expectations and no operational disruptions. The company also introduced a revamped basic economy fare structure, which it says lays the groundwork for future product differentiation.
"We continued to make meaningful progress against our transformational plan in second quarter, most notably implementing bag fees and a basic economy product,” said Bob Jordan, president, chief executive officer, & vice chairman of the board of directors at Southwest.
He added: “We are encouraged by the incremental fare product buy up that is already occurring at this early stage and in advance of assigned and premium seating that we will begin selling next week for flights beginning January 2026.
The airline expects the value of these initiatives is expected to accelerate throughout second half 2025 and even more meaningfully into 2026.
Despite a soft second quarter across the US airline industry, Southwest noted early signs of improving demand and highlighted moderated industry capacity as supportive factors heading into the third quarter and second half of the year.
The airline reiterated its long-term financial targets of delivering $1.8bn in earnings before interest and tax (EBIT) for 2025 and $4.3bn for 2026.
Southwest updated its full-year 2025 EBIT guidance to a range of $600 million to $800 million, citing ongoing cost controls and an improving demand backdrop.
Second-quarter capacity rose 1.6% on the same period of the prior year, in line with Southwest’s previous guidance. The company took delivery of 17 737 MAX 8 aircraft and retired seven 737-700 jets, ending the quarter with a fleet of 810 aircraft.
Capital expenditures totalled $635 million, driven primarily by aircraft-related spending as well as investments in technology, facilities, and operations.