Free cash flow generation remains highly erratic, with negative margins in seven of the last ten quarters, despite a recent positive 10.9% margin reported in 2026Q1.
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 | Dec'08 | Dec'07 | Dec'06 | Dec'05 | Dec'04 | Dec'03 | Dec'02 | Dec'01 | Dec'00 | Dec'99 | Dec'98 | Dec'97 | Dec'96 |
|---|
| Cash from Operations | 2.4B | 1.84B | 462M | 3.16B | 3.79B | 2.32B | -1.13B | 3.99B | 4.89B | 3.93B | 4.29B | 3.24B | 2.9B | 2.49B | 2.06B | 1.39B | 1.56B | 985M | -1.52B | 2.85B | 1.41B | 2.23B | 1.16B | 1.34B | 520.21M | 1.48B | 1.3B | 1B | 886.13M | 610.59M | 615.23M |
| Operating CF Margin % | - | 6.56% | 1.68% | 12.13% | 15.92% | 14.71% | -12.46% | 17.78% | 22.28% | 18.56% | 21.02% | 16.34% | 15.6% | 14.07% | 12.08% | 8.85% | 12.9% | 9.52% | -13.8% | 28.85% | 15.47% | 29.39% | 17.72% | 22.5% | 9.42% | 26.72% | 22.98% | 21.15% | 21.28% | 16% | 18.06% |
| Operating CF Growth % | 2024.32% | 298.7% | -85.4% | -16.52% | 63.22% | 306.03% | -128.27% | -18.52% | 24.54% | -8.48% | 32.58% | 11.58% | 16.55% | 20.64% | 49.03% | -11.27% | 58.48% | 164.76% | -153.46% | 102.35% | -36.92% | 92.65% | -13.4% | 156.82% | -64.96% | 14.35% | 29.61% | 13.04% | 45.13% | -0.75% | 34.79% |
| Net Income | 817M | 441M | 465M | 465M | 539M | 977M | -3.07B | 2.3B | 2.46B | 3.49B | 2.24B | 2.18B | 1.14B | 754M | 421M | 178M | 459M | 99M | 178M | 645M | 499M | 548M | 313M | 442M | 240.97M | 511.15M | 603.09M | 474.38M | 433.43M | 317.77M | 207.34M |
| Depreciation & Amortization | 1.56B | 1.56B | 1.66B | 1.52B | 1.35B | 1.27B | 1.25B | 1.22B | 1.2B | 1.22B | 1.22B | 1.01B | 938M | 867M | 844M | 715M | 628M | 616M | 587M | 555M | 515M | 469M | 431M | 384M | 356.3M | 317.83M | 281.28M | 248.66M | 225.21M | 195.57M | 183.47M |
| Stock-Based Compensation | 0 | 0 | 0 | 0 | 84M | 58M | 0 | 55M | 46M | 37M | 33M | 29M | 21M | 18M | 16M | 0 | 0 | 12M | 18M | 80M | 80M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Deferred Taxes | 222M | 122M | 132M | 159M | 282M | -21M | -716M | -55M | 301M | -1.21B | 455M | -109M | 501M | 50M | 251M | 123M | 133M | 72M | 56M | 328M | 277M | 257M | 184M | 183M | 169.63M | 207.92M | 153.45M | 142.94M | 108.33M | 81.71M | 67.25M |
| Other Non-Cash Items | -40M | -3M | -206M | -231M | 51M | 136M | -261M | -138M | -15M | 258M | 370M | -1.03B | -510M | 144M | 354M | 267M | 139M | 2M | -226M | -236M | 26M | -17M | 14M | 83M | 15.02M | 60.41M | 36.92M | 30.65M | 10.61M | 12.59M | 170.36M |
| Working Capital Changes | -161M | -278M | -1.59B | 1.25B | 1.48B | -100M | 1.67B | 606M | 941M | 227M | 182M | 1.07B | 558M | 680M | 383M | 293M | 216M | 184M | -2.36B | 1.47B | 9M | 907M | 180M | 203M | -300.29M | 333.61M | 161.87M | 105.08M | 108.54M | 2.94M | -13.19M |
| Change in Receivables | -98M | 51M | 19M | -89M | 422M | -701M | -294M | -94M | 117M | -102M | -50M | -88M | 54M | -17M | -33M | -26M | -26M | 40M | 71M | -38M | -5M | -9M | -75M | 43M | -103.11M | 66.79M | -63.03M | 15.4M | -12.3M | -3.1M | 6.3M |
| Change in Inventory | 0 | 0 | 0 | -77M | 0 | 663M | 63M | -204M | -662M | -262M | -119M | 103M | 142M | -46M | -104M | 254M | 279M | 54M | -384M | 297M | 523M | 289M | -6M | -559M | -846.46M | -216.72M | 562.33M | -31.49M | 20.91M | 2M | -14.16M |
| Change in Payables | 264M | 218M | -1.36B | 1.39B | 936M | 38M | 231M | 298M | 545M | 246M | 226M | 961M | 36M | 343M | 186M | 253M | 59M | 59M | -1.85B | 1.61B | -223M | 855M | 231M | 129M | -148.85M | 202.51M | 129.44M | 64.3M | 53.2M | 8.8M | 132.1M |
| Cash from Investing | -2.5B | -1.43B | -261M | -2.93B | -3.75B | -1.26B | -16M | -303M | -2.04B | -2.41B | -2.27B | -1.91B | -1.73B | -1.38B | -833M | -1.05B | -1.26B | -1.57B | -978M | -1.53B | -1.5B | -1.21B | -1.85B | -1.24B | -603.06M | -997.84M | -1.13B | -1.17B | -947.1M | -688.93M | -677.43M |
| Capital Expenditures | -2.8B | -2.67B | -2.04B | -3.55B | -3.95B | -511M | -515M | -1.03B | -1.98B | -2.25B | -2.15B | -2.14B | -1.83B | -1.45B | -1.35B | -968M | -493M | -585M | -923M | -1.33B | -1.4B | -1.21B | -1.77B | -1.24B | -603.06M | -997.84M | -1.13B | -1.17B | -947.1M | -688.93M | -677.43M |
| CapEx % of Revenue | 9.7% | 9.53% | 7.42% | 13.62% | 16.57% | 3.24% | 5.69% | 4.58% | 9% | 10.62% | 10.51% | 10.81% | 9.83% | 8.18% | 7.89% | 6.18% | 4.07% | 5.65% | 8.37% | 13.5% | 15.4% | 15.95% | 27.18% | 20.85% | 10.92% | 17.96% | 20.08% | 24.66% | 22.75% | 18.05% | 19.89% |
| Acquisitions | 24M | 0 | 0 | 0 | 22M | 505M | 515M | 1.03B | 1.92B | 2.12B | 2.04B | -2.04B | -1.75B | 0 | 0 | -35M | -2M | 0 | 0 | -21M | -20M | -6M | -34M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | 162M | 21M | 797M | 0 | -22M | -505M | 728M | -627M | -1.92B | -2.12B | -2.04B | 2.03B | 1.74B | 63M | 32M | -35M | 2M | 2M | 0 | 21M | 41M | 0 | -41M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cash from Financing | -4.71B | -4.69B | -1.98B | -436M | -3.03B | 359M | 9.66B | -2.99B | -2.5B | -1.71B | -1.92B | -1.02B | -1.25B | -864M | -947M | -766M | -149M | 330M | 1.65B | -493M | -801M | 213M | 133M | -48M | -381.66M | 1.27B | -59.47M | 206.43M | -183.87M | 119.84M | 326.68M |
| Debt Issued (Net) | -1.28B | -1.77B | -1.34B | -85M | -3.08B | 231M | 8.1B | -615M | -342M | 8M | -76M | 287M | -261M | -313M | -578M | -621M | -199M | 336M | 1.44B | 378M | -307M | 151M | 313M | -130M | -155M | 978.65M | -10.24M | 243.5M | -118.86M | 86.1M | -12.7M |
| Equity Issued (Net) | -2.99B | -2.49B | -190M | 48M | 45M | 51M | 1.89B | -1.96B | -1.97B | -1.57B | -1.72B | -1.13B | -845M | -444M | -373M | -205M | 55M | 20M | 63M | -862M | -540M | 77M | -158M | 93M | 57M | 43.54M | -38.25M | -26.2M | -55.73M | 40.34M | 15.59M |
| Dividends Paid | -385M | -399M | -430M | -428M | 0 | 0 | -188M | -372M | -332M | -274M | -222M | -180M | -139M | -71M | -22M | -14M | -13M | -13M | -13M | -14M | -14M | -14M | -14M | -14M | -13.87M | -13.44M | -10.98M | -10.84M | -9.28M | -6.59M | -6.22M |
| Share Repurchases | -3.05B | -2.55B | -250M | 0 | 0 | 0 | -451M | -2B | -2B | -1.6B | -1.75B | -1.18B | -955M | -540M | -400M | -225M | 0 | 0 | -54M | -1B | -800M | -55M | -246M | 0 | 0 | 0 | -108.67M | -90.5M | -100M | 0 | 0 |
| Other Financing | -57M | -26M | -23M | 29M | 8M | 77M | -144M | -43M | 143M | 131M | 95M | 3M | -3M | -23M | 26M | 74M | 8M | -13M | 168M | 5M | 60M | -1M | -8M | 3M | -269.79M | 261.35M | 0 | -26K | 0 | 0 | 330M |
| Net Change in Cash | -4.81B | -4.28B | -1.78B | -204M | -2.99B | 1.42B | 8.52B | 694M | 359M | -185M | 97M | 301M | -73M | 242M | 284M | -432M | 147M | -254M | -845M | 823M | -890M | 1.23B | -560M | 50M | -464.51M | 1.76B | 104.18M | 40.31M | -244.83M | 41.5M | 264.48M |
| Free Cash Flow | -401M | -831M | -1.62B | -389M | -156M | 1.81B | -1.64B | 2.96B | 2.92B | 1.68B | 2.15B | 1.09B | 1.07B | 1.04B | 716M | 417M | 1.07B | 400M | -2.44B | 1.51B | 7M | 1.02B | -618M | 98M | -82.85M | 486.76M | 163.64M | -166.12M | -60.96M | -78.34M | -62.2M |
| FCF Margin % | -1.39% | -2.96% | -5.89% | -1.49% | -0.66% | 11.47% | -18.15% | 13.2% | 13.28% | 7.94% | 10.51% | 5.52% | 5.77% | 5.89% | 4.19% | 2.66% | 8.82% | 3.86% | -22.17% | 15.35% | 0.08% | 13.44% | -9.46% | 1.65% | -1.5% | 8.76% | 2.9% | -3.51% | -1.46% | -2.05% | -1.83% |
| FCF Growth % | 28.65% | 48.64% | -315.94% | -149.36% | -108.61% | 210.29% | -155.47% | 1.47% | 73.63% | -21.71% | 95.98% | 1.96% | 2.97% | 45.67% | 71.7% | -60.96% | 167% | 116.37% | -261.43% | 21528.57% | -99.31% | 264.89% | -730.61% | 218.28% | -117.02% | 197.46% | 198.51% | -172.51% | 22.18% | -25.94% | 77.15% |
| FCF per Share | -0.80 | -1.49 | -2.52 | -0.61 | -0.24 | 2.97 | -2.91 | 5.49 | 5.08 | 2.79 | 3.39 | 1.64 | 1.54 | 1.45 | 0.95 | 0.54 | 1.43 | 0.54 | -3.31 | 1.97 | 0.01 | 1.26 | -0.75 | 0.12 | -0.08 | 0.60 | 0.21 | -0.21 | -0.08 | -0.10 | -0.08 |
| FCF Conversion (FCF/Net Income) | -0.49x | 4.18x | 0.99x | 6.80x | 7.03x | 2.38x | 0.37x | 1.73x | 1.98x | 1.13x | 1.91x | 1.48x | 2.55x | 3.30x | 4.90x | 7.78x | 3.40x | 9.95x | -8.54x | 4.41x | 2.82x | 4.07x | 3.70x | 3.02x | 2.16x | 2.90x | 2.15x | 2.11x | 2.04x | 1.92x | 2.97x |
| Interest Paid | 56M | 0 | 220M | 228M | 305M | 336M | 212M | 88M | 107M | 81M | 100M | 105M | 128M | 133M | 153M | 185M | 135M | 152M | 100M | 63M | 78M | 71M | 38M | 62M | 80M | 47.68M | 36.95M | 26.6M | 33.4M | 42.4M | 36.6M |
| Taxes Paid | 4M | 0 | 9M | 18M | 20M | 445M | 19M | 779M | 327M | 992M | 902M | 1.44B | 155M | 346M | 100M | 13M | 274M | 5M | 71M | 94M | 15M | 8M | 2M | 51M | 3M | 65.91M | 150M | 132M | 147.4M | 107.1M | 66.4M |
Operational Margin Erosion
As reported in recent financial statements, LUV's operating cash flow to net income ratio has exhibited extreme volatility, ranging from -5.77 to 6.25, which suggests that reported earnings are frequently decoupled from the actual cash-generating capacity of the airline's core passenger operations.
The significant variance between net income and operating cash flow indicates that non-cash items and working capital swings are heavily distorting the quality of earnings. Investors should monitor whether this divergence is a structural byproduct of the loyalty program accounting or a sign of deteriorating cash conversion efficiency.
Based on quarterly cash flow data, LUV's free cash flow trajectory remains highly erratic, with negative margins in seven of the last ten quarters, peaking at a -11.0% margin in 2024Q1 and only recently turning positive at 10.9% in 2026Q1.
The inability to consistently generate positive free cash flow suggests that the company's current capital intensity is outpacing its operational cash generation. This trend warrants further investigation into whether the recent positive FCF is a sustainable recovery or merely a temporary benefit from seasonal working capital timing.
According to SEC filings, LUV's capital expenditure as a percentage of revenue has remained elevated, fluctuating between 6.7% and 11.5% over the past ten quarters, reflecting the ongoing financial burden of maintaining and modernizing its aging Boeing 737 fleet.
High capital intensity appears to be a structural headwind that limits the company's ability to retain cash during periods of operational stress. The persistent need for heavy investment suggests that the company may struggle to achieve meaningful free cash flow growth until fleet delivery schedules stabilize.
As indicated by the provided cash flow data, working capital changes have been a major source of quarterly cash flow instability, with swings as large as $776 million in 2026Q1, highlighting the company's sensitivity to seasonal booking cycles and passenger deposit timing.
The extreme volatility in working capital suggests that LUV's cash position is highly dependent on the timing of ticket sales relative to travel dates. This reliance may indicate that the company is using customer deposits as a form of short-term financing, which could become a liability during demand downturns.
Based on reported figures, LUV has continued to prioritize share repurchases, including a $1.2 billion buyback in 2026Q1, even while the company's free cash flow generation has been historically inconsistent and frequently negative over the preceding two-year period.
The decision to return significant capital to shareholders while struggling with operational cash flow may indicate a management focus on supporting the stock price over strengthening the balance sheet. This strategy appears risky given the thin operating margins and the ongoing need for substantial fleet-related capital expenditures.
Quick answers to the most common questions about buying LUV stock.
Southwest Airlines Co. (LUV) generated $1.84B in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Southwest Airlines Co. (LUV) reported negative free cash flow of $831.0M in 2025, indicating capital requirements exceeded cash from operations.
Southwest Airlines Co. (LUV) spent $2.67B on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Southwest Airlines Co. (LUV) returned $399.0M to shareholders via cash dividends and spent $2.55B on share repurchases. This shows the company's commitment to returning capital to its equity investors.