Southwest Airlines (LUV) withdrew its profit guidance, citing macro woes. Specifically, the Dallas-based carrier stated that it is not reiterating its full-year 2025 and 2026 EBIT (earnings before interest and taxes) outlook. On Wednesday, peer Alaska Air Group (ALK) also scrapped its 2025 profit outlook. LUV stock was down 2.6% in Wednesday’s after-hours trading while ALK stock fell about 7%.
Earlier this month, Delta Air Lines (DAL) and Frontier (ULCC) also pulled their guidance, while United Airlines (UAL) issued two forecasts for two different scenarios, saying that it is “impossible” to predict the U.S. economy. The ongoing tariff wars have triggered fears of a decline in consumer spending due to a potential economic slowdown.
“Amid the current macroeconomic uncertainty, it is difficult to forecast given recent and short-lived booking trends,” Southwest said.
Southwest Reports Mixed Q1 2025 Results
Southwest Airlines announced mixed results for the first quarter of 2025. The company’s operating revenue grew 1.6% year-over-year to $6.93 billion, slightly lagging the Street’s consensus estimate of $6.96 billion. Meanwhile, Q1 adjusted loss per share of $0.13 was better than the analysts’ consensus loss per share estimate of $0.18.
The company stated that it is reducing its capacity for the second half of the year. Southwest expects its unit revenue growth for the second quarter to be in the range of 0% to down 4% year over year.
Last year, Southwest faced pressure from activist investor Elliott Management, which acquired a stake in the carrier and pushed for changes to better compete with rival airlines. The company highlighted that it is seeing positive results for its recently implemented initiatives, including the launch of Expedia (EXPE) as a new distribution channel and the further optimization of its loyalty program. Among other initiatives, Southwest aims to begin charging many travelers to check their bags starting next month.
Is LUV Stock a Good Buy Now?
Wall Street is sidelined on Southwest Airlines stock, with a Hold consensus rating based on four Buys, six Holds, and six Sells. The average LUV stock price target of $30.13 implies 18.1% upside potential.
Note that these ratings and price targets could be revised following the company’s conference call on Thursday.
