Southwest struggles with costs, pulls its 2025 outlook on tariff uncertainty
All the big four airlines have now reported first-quarter results, but none of them know what their futures will look like.
Shares of Southwest Airlines slipped more than 3% premarket as the company posted a first-quarter loss and said its nonfuel costs were rising.
In its last full quarter with its famous “bags fly free” policy, Southwest reported revenue of $6.43 billion, above analyst estimates of $6.39 billion. The carrier posted a loss of $0.13 a share, better than the loss of $0.18 expected by analysts.
Despite a slew of cost-cutting measures since it ceded five board seats to activist investor Elliott Management in October, Southwest reported that its nonfuel costs rose 4.6% in the first quarter. The carrier expects those costs to rise between 3.5% and 5.5% in the current quarter. Beginning May 28, all passengers purchasing tickets will have to pay an as yet undefined fee for checked luggage.
Like most of its rivals, Southwest also pulled its financial outlook for the year, saying it would not reiterate its guidance for full-year 2025 or 2026 adjusted earnings.
“Amid the current macroeconomic uncertainty, it is difficult to forecast given recent and short-lived booking trends,” the airline said.
As tariffs hit air travel, airlines like Delta Air Lines and Frontier Airlines have pulled their full-year guidance, while United Airlines instead opted for the bold strategy of issuing dual forecasts (one for a recession and one for a normal year). American Airlines, which reported Thursday morning, opted to yank its guidance as well.
With investors fearing a tariff-y travel slump, the big four airlines, which collectively control 80% of the US market, have shed more than $32 billion in market cap so far this year as of Wednesday’s close.
