On Thursday, Southwest Airlines Company (NYSE:LUV) shares traded higher after the company announced it will launch a $750 million stock buyback program in the first quarter of 2025. The move follows the $250 million accelerated share repurchase launched in October 2024.
After this, $1.5 billion will remain under its $2.5 billion repurchase program, authorized in September 2024.
Outlook: The company revised its fourth-quarter guidance, now expecting RASM to increase by 5.5% to 7.0% (vs. 3.5%- 5.5% prior) and economic fuel costs per gallon to be $2.35 to $2.45 (vs. $2.25 to $2.35 earlier).
The company expects unit revenues to rise 5.5%-7.0% YoY, with capacity down ~4%. This improvement is driven by robust travel demand and benefits from tactical initiatives, including network optimization, capacity adjustments, enhanced marketing, and advanced revenue management.
Strong holiday bookings and improved revenue trends bolster confidence in its "Southwest. Even Better." plan, set to extend momentum into 2025.
Meanwhile, it still projects ASMs down ~4% and CASM-X up 11% to 13% in the quarter.
The company is also advancing its fleet strategy, targeting an initial transaction by early 2025, including aircraft sales and sale-leasebacks, to optimize fleet value.
Southwest continues to plan for approximately 20 Boeing (NYSE:BA) 737-8 aircraft deliveries and now expects 40 aircraft retirements in 2024, comprised of 36 Boeing 737-700s and four Boeing 737-800s.
In October, the company reported a third-quarter 2024 operating revenue increase of 5.3% year-over-year to $6.870 billion, beating the consensus of $6.735 billion. Adjusted EPS was $0.11, down from $0.31 last year, beating the consensus $0.00.
Investors can gain exposure to the stock via U.S. Global Jets ETF (NYSE:JETS) and Themes Airlines ETF (NASDAQ:AIRL).
Price Action: LUV shares are up 2.90% at $35.14 at the last check Thursday.
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Photo by Southwest Airlines
