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.
Key risk: Liquidity Pressure from Low Current Ratio
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.
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