Southwest Airlines Company · NYSE:LUV
Southwest Airlines — J.P. Morgan Conference 2025
15 slides from Southwest Airlines's conference presentation, Mar 11, 2025
Slide 1: J.P. Morgan Conference March 11, 2025
J.P. Morgan Conference March 11, 2025
Slide 2: Cautionary statement regarding forward-looking statements
2 Cautionary statement regarding forward-looking statements This Investor Update presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statement
Slide 3: Glossary of terms and acronyms
3 Glossary of terms and acronyms Item Definition ASM An available seat mile, or one seat (empty or full) flown one mile. Also referred to as "capacity," which is a measure of the space available to carry passengers in a given period CASM-X The average cost to fly an aircraft seat (empty or full) one
Slide 4: Agenda
Agenda First quarter 2025 guidance update Context on margin contraction Progress against prior initiatives New cost and revenue initiatives Impact of new initiatives on 2025 and 2026 Update on share repurchase Southwest is changing 4
Slide 5: Updated 1Q2025 guidance
5 Updated guidance Prior guidance ASMs, year-over-year Down ~2% Down 2% to 3% RASM, year-over-year Up 2% to 4% Up 5% to 7% CASM-X, year-over-year Up ~6% Up 7% to 9% Fuel cost per gallon $2.35 to $2.45 $2.50 to $2.60 Updated 1Q2025 guidance Note: See "Non-GAAP Financial Measures" for additional infor
Slide 6: In recent years, Southwest has faced significant cost pressures
6 In recent years, Southwest has faced significant cost pressures New labor agreements for all workgroups Corporate overhead and cost structure increases Investments in information technology and operational reliability Staffing inefficiencies driven by aircraft delivery delays
Slide 7: Competitors generated revenues that Southwest did not pursue
7 Bag fees Flight credit expiration Basic economy Seat assignments Extra legroom seating Dynamic loyalty and ancillary pricing Airline partnerships Online travel agencies Competitors generated revenues that Southwest did not pursue
Slide 8: Significant progress made on previously announced initiatives
8 Significant progress made on previously announced initiatives Assigned seating & extra legroom Assigned seating and extra legroom on track for sale in 3Q2025 and operate in 1Q2026 Loyalty program Amended co-brand agreement with Chase that provides enhanced Cardmember benefits and supports multi-ye
Slide 9: Accelerated cost plan doubles 2027 target to more than ~$1B
Accelerated cost plan doubles 2027 target to more than ~$1B1 1. Excludes profit sharing of 15% Current target 2025 $150M Current target 2026 $785M Current target Investor Day target $500M 2027 $1,045M +$545M +109% Examples include: • Corporate overhead reduction implemented • Ground operations optim
Slide 10: Significant new revenue initiatives are underway
Significant new revenue initiatives are underway • Introducing bag fees for most fare products • Incentivizes co- brand card adoption • First bag free for tier Customers and co-brand Cardmembers Changing policy on bag fees • Better aligning earn rates to fare paid • Dynamic optimization of redemptio
Slide 11: Investor Day initiative target
Investor Day initiative target 11 Initiatives underway are expected to materially accelerate and increase EBIT contribution in 2025 and 2026 $1.8B $4.3B Current initiative target Investor Day initiative target Current initiative target$1.0B $2.6B 2025 2026 +$0.8B +80% +$1.7B +65% Note: See "Non-GAAP
Slide 12: 2025 and 2026 EBIT; 2027 ROIC target of ≥15% expected in 2026
ROIC guideEBIT guide 12 2025 and 2026 EBIT; 2027 ROIC target of ≥15% expected in 2026 ~$1.7B 2025 ~$3.8B 2026 >WACC 2025 ≥15% 2026 Note: See "Non-GAAP Financial Measures" for more information. Excludes annual average of $400M to $500M for fleet initiative over the three-year period from 2025 to 2027
Slide 13: We are accelerating our $2.5B share buyback program
13 We are accelerating our $2.5B share buyback program 3Q2024 4Q2024 1Q2025 2Q2025 3Q2025 4Q2025 $250M $750M $1.5B $250M $750M $1.5B 4Q2024 Earnings Today Expected to be completed in July 2025
Slide 14: Southwest is changing, rapidly
Southwest is changing, rapidly Flight credit expiration Assigned seating and extra legroom Loyalty program optimization Online travel agency participation Amended Chase co-brand agreement Accelerated and increased cost reduction targets Streamlining of corporate overhead Fuel hedging program discont
Slide 15: Southwest
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