Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Southwest Airlines (LUV) returned to profitability in Q1 FY2026, posting net income of $227M and revenue of $7.25B (+12.8% YoY), a dramatic turnaround from a $149M net loss in the prior-year period.
Revenue
$7.25B
+12.77% YoY
EPS (Diluted)
$0.45
+273.08% YoY
Operating Income
$330M
+247.98% YoY
Source: SEC XBRL
Southwest Airlines (LUV) reported Q1 FY2026 revenue of $7.25B, up 12.8% year over year. Operating margin was 4.6%, against -3.5% a year earlier. Operating cash flow was $1.42B, up 64.9% year over year. LUV's fiscal Q1 FY2026 corresponds to calendar Q1 2026.
Last 4 quarters: 2 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026 | 0.94 | 0.52 | Beat +82.5% |
| Mar 2026This filing | 0.45 | 0.48 | Miss -5.8% |
| Dec 2025 | 0.58 | 0.58 | Miss -0.6% |
| Sep 2025 | 0.11 | -0.03 | Beat +432.3% |
Reported EPS of $0.45 versus the $0.48 analyst consensus — a -5.8% miss for Mar 2026.
Compiled by AI from this SEC filing
Total revenue surged 12.8% year-over-year to $7.25B in Q1 FY2026, up from $6.43B in Q1 FY2025, reflecting improved passenger demand and pricing power as the airline industry continued its post-pandemic normalization.
Source: 10-Q Income Statement
Operating income swung from a loss of $223M to a gain of $330M, representing a $553M improvement and an operating margin of approximately 4.6%, compared to -3.5% in the prior year period — a significant operational turnaround.
Source: 10-Q Income Statement
Operating cash flow increased 64.9% year-over-year to $1.42B, up from $860M, demonstrating improved cash generation from core airline operations and supporting the company's capital return program.
Source: 10-Q Cash Flow Statement
Southwest returned $1.34B to shareholders in Q1 FY2026, including $1.25B in share buybacks (up 66.7% YoY) and $93M in dividends, signaling management confidence in the company's financial recovery.
Source: 10-Q Cash Flow Statement
Cash and equivalents fell sharply by 59.1% to $3.33B from $8.13B in the prior year, largely driven by the substantial share repurchase program, which warrants monitoring given the current ratio of only 0.48.
Source: 10-Q Balance Sheet
Compiled by AI from this SEC filing · 2 high, 3 medium, 0 low
Southwest's current ratio stands at just 0.48, meaning current liabilities of $12.48B significantly exceed current assets of $5.97B. This below-1.0 ratio indicates the company may face challenges meeting short-term obligations without additional financing or cash generation. The sharp 44.4% decline in current assets year-over-year amplifies this concern.
Source: 10-Q Balance Sheet
Stockholders' equity dropped 26.6% year-over-year to $6.88B from $9.37B, partly driven by the aggressive $1.25B share buyback program. Continued large-scale repurchases could further erode the equity base, increasing financial leverage and reducing the company's buffer against future downturns.
Source: 10-Q Balance Sheet & Cash Flow Statement
Despite the turnaround, net margin remains modest at approximately 3.1% and operating margin at 4.6%. These thin margins mean that any significant increase in fuel costs, labor expenses, or demand softness could quickly push the airline back into losses, as demonstrated by the prior-year period.
Source: 10-Q Income Statement
Southwest spent $1.25B on share buybacks in a single quarter while generating $1.42B in operating cash flow, leaving limited free cash flow after capital expenditures of approximately $445M. Sustaining this pace of buybacks may require drawing down cash reserves or taking on additional debt.
Source: 10-Q Cash Flow Statement
Total assets declined 11.6% year-over-year to $29.36B from $33.21B, reflecting the significant reduction in cash and liquid assets. A shrinking asset base combined with relatively stable liabilities increases the company's overall leverage profile and reduces financial flexibility.
Source: 10-Q Balance Sheet
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 7.25 $B | 6.43 $B | +12.77% |
Operating Income $M | 330.00 $M | -223.00 $M | +247.98% |
Net Income $M | 227.00 $M | -149.00 $M | +252.35% |
EPS (Basic) $ | 0.45 $ | -0.26 $ | +273.08% |
EPS (Diluted) $ | 0.45 $ | -0.26 $ | +273.08% |
Answers draw on this SEC filing and the data on this page
In Q2 FY2026, Southwest Airlines (LUV) delivered record quarterly revenue of $8.432B and 26.7% growth in GAAP operating income to $285M, but sharply higher fuel costs and a $285M flight-credit breakage revenue reversal constrained the reported operating margin to 3.4%.
Southwest Airlines (LUV) posted FY2025 revenue of $28.1B (+2.1% YoY) with operating income surging 33.3% to $428M, but net income dipped 5.2% to $441M while the company deployed $2.55B in share buybacks and saw cash reserves fall sharply by 57%.
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