At a glance
Southwest Airlines Company is worth $21.52B, about 56 times its fiscal 2025 earnings. Revenue grew 2.1% to $28.06B in fiscal 2025, with 1.6% kept as profit; over 5 years it has grown 25.4% a year. It pays a 1.64% dividend yield, and returned $4.06B to shareholders in dividends and buybacks over FY2021–FY2025. The stock returned +47.7% over the past year with dividends reinvested and −0.4% a year over five years, against +11.5% and +11.7% for the S&P 500. At its worst it fell 45.7% in the 2020 crash (S&P 500: 33.7%) and 36.3% in the 2022 bear market (S&P 500: 24.5%), and was back at its earlier high 11 months and 40 months after the lows.
The business in plain English
Southwest Airlines Co. runs Southwest Airlines, a passenger airline that flies scheduled routes within the United States and to nearby international destinations. It started flying on June 18, 1971, with three Boeing 737s serving Dallas, Houston and San Antonio. As of December 31, 2025, it had 803 Boeing 737s and served 117 destinations in 42 states, Washington, D.C., Puerto Rico and ten nearby countries, including Mexico, Jamaica and Costa Rica.
Most of its money comes from passengers. Revenue was $28.1 billion in the year ended December 31, 2025. Regular passenger fares brought in 72.8%, flights tied to its loyalty program brought in 11.6%, and add-ons paid for separately from the fare brought in 6.5%. Other revenue made up 8.4% and freight just 0.6%.
Most big US airlines route travelers through a few central “hub” airports. Southwest mainly flies “point-to-point” instead, linking cities directly. In 2025, 74% of its customers flew nonstop. It keeps costs down by flying one aircraft type and using less congested airports such as Dallas Love Field, Houston Hobby and Chicago Midway. The company has been reworking its model. In 2025 it added overnight “redeye” flights, partnered with six international airlines and launched Getaways by Southwest vacation packages. On January 27, 2026, it began assigned and extra-legroom seating.
Price history
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LUV +47.7% over the year to Nov 2, 2026, total return with dividends reinvested.
How it makes money
By product or service
| Passenger non-loyalty | $20.44B | 72.8% |
| Passenger loyalty - air transportation | $3.26B | 11.6% |
| Other | $2.36B | 8.4% |
| Passenger ancillary sold separately | $1.83B | 6.5% |
| Freight | $171.0M | 0.6% |
Latest results
- In Q3 FY2026 (ended Sep 30, 2026), revenue was $8.42B, up 21.2% from a year earlier, and net income was $270.0M (+400.0%).
- For fiscal 2025, revenue was $28.06B (+2.1% year over year; +25.4% a year from FY2020 to FY2025) with a 1.6% net margin.
Financial health check
| Revenue growth a year (FY2020–FY2025) | +25.4% good |
|---|---|
| Operating margin | 1.5% weak |
| Free cash flow margin | -3% weak |
| Return on equity (FY2025) | 5.5% weak |
| Return on assets (FY2025) | 1.5% weak |
| Net cash (cash minus debt) | $-2.26B watch |
| Fiscal year | Revenue | Net income | Free cash flow |
|---|---|---|---|
| FY2020 | $9.05B | $-3.07B | $-1.64B |
| FY2021 | $15.79B | $977.0M | $1.82B |
| FY2022 | $23.81B | $539.0M | $-134.0M |
| FY2023 | $26.09B | $465.0M | $-356.0M |
| FY2024 | $27.48B | $465.0M | $-1.59B |
| FY2025 | $28.06B | $441.0M | $-831.0M |
Valuation snapshot
| Market value | $21.52B |
|---|---|
| P/E ratio | 55.6 |
| Dividend yield | 1.64% |
Rank among 1514 US companies
Market value at each year end
Southwest Airlines’s market value went from $30.68B at the end of 2016 to $21.52B on Nov 2, 2026, down 30%; since the end of 2025 it is up 1%.
Show as a table
| Year end | Market value | Change |
|---|---|---|
| Nov 2, 2026 | $21.52B | +0.7% |
| 2025 | $21.37B | +6.0% |
| 2024 | $20.16B | +17.1% |
| 2023 | $17.22B | -13.9% |
| 2022 | $19.99B | -21.2% |
| 2021 | $25.36B | -7.8% |
| 2020 | $27.51B | -3.2% |
| 2019 | $28.41B | +8.7% |
| 2018 | $26.14B | -32.7% |
| 2017 | $38.84B | +26.6% |
| 2016 | $30.68B |
Price behavior
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | |
|---|---|---|---|---|---|
| LUV price data to Nov 2, 2026 | +7.8% | +47.7% | +26.5% | -0.4% | +2.3% |
Show as a table
| Year | Price data |
|---|---|
| 2026 (to date) | +7.8% |
| 2025 | +25.6% |
| 2024 | +19.1% |
| 2023 | -11.8% |
| 2022 | -21.4% |
| 2021 | -8.1% |
| 2020 | -13.3% |
| 2019 | +17.7% |
| 2018 | -28.2% |
| 2017 | +32.4% |
| 2016 | +16.8% |
| 2015 | +2.5% |
| 2014 | +126.3% |
| 2013 | +85.6% |
| 2012 | +20.1% |
| 2011 | -33.9% |
| 2010 | +13.8% |
| 2009 | +33.0% |
| 2008 | -29.2% |
| 2007 | -20.3% |
| 2006 | -6.7% |
| 2008 financial crisis stocks fell Oct 9, 2007 – Mar 9, 2009 | Lost 65.3% over that stretch · deepest drop along the way 69.5%, back to its old high 55.6 months after the low |
|---|---|
| 2020 COVID crash stocks fell Feb 19, 2020 – Mar 23, 2020 | Lost 40.7% over that stretch · deepest drop along the way 45.7%, back to its old high 11.2 months after the low |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Lost 28.2% over that stretch · deepest drop along the way 36.3%, back to its old high 40 months after the low |
Insider activity
Form 4 filings from 2025-11-03 to 2026-11-03 (25 read): 0 open-market purchases and 1 sales ($4K).
| Date | Insider | Type | Value |
|---|---|---|---|
| Apr 7, 2026 | Lisa M Atherton Director | sell | $4K |
Who owns it
Large shareholders (13G filings)
| Franklin Templeton, Inc. | 10.2% | Sep 30, 2026 |
| PRIMECAP MANAGEMENT CO/CA/ | 10.02% | Sep 30, 2026 |
| Franklin Resources, Inc. | 9% | Mar 31, 2026 |
| Vanguard Capital Management | 7.25% | Mar 31, 2026 |
| Capital World Investors | 4.4% | Feb 28, 2025 |
ETFs with the most weight in LUV
| JETS U.S. Global Jets ETF | 10.67% |
| AIRL Themes Airlines ETF | 4.23% |
| IYT iShares US Transportation ETF | 3.04% |
| PVAL Putnam Focused Large Cap Value ETF | 2.41% |
| CVAR Cultivar ETF | 2.33% |
| RSPN Invesco S&P 500 Equal Weight Industrials ETF | 1.18% |
| LQAI LG QRAFT AI-Powered U.S. Large Cap Core ETF | 1.11% |
| TEQI T. Rowe Price Equity Income ETF | 0.95% |
What could go wrong
- Total reliance on Boeing. Every Southwest plane is a Boeing 737, powered by engines from a single supplier. A MAX grounding or longer delivery delays could derail its plans, and the 737-7's arrival depends on FAA certification.
- Fuel costs with no hedging cushion. Fuel was 19% of operating expenses in 2025, its second-largest cost. In the second quarter of 2025, Southwest ended its hedging program (contracts that soften price swings), leaving it more exposed to fuel spikes.
- Major business changes may not pay off. Southwest has been overhauling its model with assigned seats, new boarding, redeye flights, vacation packages and foreign airline partners. If the changes fail to win customers or deliver expected returns, results could suffer.
- Rising costs could erode its edge. Low costs have long been Southwest's key edge in an intensely competitive industry. Most employees are represented by unions, so labor conflicts or trouble hiring and keeping staff could raise costs and squeeze thin margins.
- Storms, IT failures and airport disruptions. Extreme weather and problems at its core airports have seriously disrupted Southwest before. It relies heavily on technology, so IT failures or cyberattacks on its systems or vendors could disrupt flights.
- Thin margins when the economy slows. Air travel demand drops when the economy weakens. With an operating margin (profit from operations as a share of revenue) of 1.5% in 2025, Southwest has little cushion if fares or passenger numbers fall.
Recent events
- Major agreement signed; New debt or financial obligation; Other company announcement
- Quarterly results released
- Major agreement signed; Major agreement ended; New debt or financial obligation
- Executive or board change
- Quarterly results released
- Major agreement signed; New debt or financial obligation
- Shareholder vote results
- Quarterly results released
- Major agreement signed; New debt or financial obligation
- Executive or board change
For income and retirement investors
Southwest pays a dividend, but it was flat at $0.72 per share in fiscal 2023, 2024 and 2025, so there is no streak of increases. It paid nothing in fiscal 2021. The yield was 1.66% as of October 28, 2026. The dividend took 90.5% of fiscal 2025 earnings and was not covered by free cash flow (cash from operations after capital spending), which was negative $831 million. Southwest still repurchased $2.55 billion of stock in fiscal 2025, and its share count fell 17.3% from October 2021 to October 2026.
The stock has fallen hard in downturns. It dropped 69.5% in the 2008 financial crisis and did not regain its prior high until October 2013. It fell 45.7% in the 2020 COVID crash, recovering by February 2021, and 36.3% in the 2022 bear market, recovering only in January 2026. Single stocks, especially airlines, carry more risk than diversified funds.
Questions investors ask
How does Southwest Airlines make money?
Mostly from passenger fares. In the year ended December 31, 2025, Southwest brought in $28.1 billion of revenue. Regular passenger fares made up 72.8%, flights tied to its loyalty program 11.6%, and add-ons paid for separately from the fare 6.5%. Other revenue was 8.4% and freight 0.6%. It flies only Boeing 737s, mostly on direct point-to-point routes. As of December 31, 2025, it served 117 destinations in the US and ten nearby countries.
Does Southwest Airlines pay a dividend?
Yes, but the amount has been flat. Southwest paid $0.72 per share in each of fiscal 2023, 2024 and 2025, and the yield was 1.66% as of October 28, 2026. It paid no dividend in fiscal 2021. The payout took 90.5% of fiscal 2025 earnings, and free cash flow was negative $831 million that year. That leaves little room for increases unless profits improve.
Is Southwest Airlines profitable?
Yes, but its fiscal 2025 margins were thin. Southwest earned $441 million in fiscal 2025 on $28.1 billion of revenue, a net margin of 1.6%, and free cash flow was negative $831 million. Results improved in the quarter ended September 30, 2026: revenue rose 21.2% from a year earlier to $8.4 billion, and net income rose 400% to $270 million. Thin earnings help explain a price-to-earnings ratio of 55 as of October 28, 2026. That means the share price was 55 times fiscal 2025 earnings per share.
Why does Southwest only fly Boeing 737s?
Using a single aircraft type keeps operations simpler and cheaper. Southwest says one fleet type simplifies scheduling, maintenance, flight operations, safety management and training. The trade-off is that Boeing is its only aircraft maker, and MAX delivery delays led Southwest to rework its order schedule. As of December 31, 2025, it had 300 737-8s in its fleet, 465 firm MAX orders due through 2031 and 152 options to order more.
Why did Southwest switch to assigned seating?
To better match passenger preferences and improve financial results. Southwest began assigned and extra-legroom seating on January 27, 2026, as part of a wider overhaul aimed at the customer experience, profits and shareholder value. Passengers choose a standard seat, a preferred seat near the front of the cabin, or an extra-legroom seat. Boarding groups are set by seat location, fare type and loyalty status. Southwest warns that if it cannot carry out its strategic plans effectively, results could suffer.