Operating margins remain thin at 4.6% as of 2026Q1, reflecting ongoing difficulties in managing rising labor costs and operational inefficiencies within the airline's single-type fleet configuration.
| 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 |
|---|
| Sales/Revenue | 28.88B | 28.06B | 27.48B | 26.09B | 23.81B | 15.79B | 9.05B | 22.43B | 21.96B | 21.17B | 20.43B | 19.82B | 18.61B | 17.7B | 17.09B | 15.66B | 12.1B | 10.35B | 11.02B | 9.86B | 9.09B | 7.58B | 6.53B | 5.94B | 5.52B | 5.56B | 5.65B | 4.74B | 4.16B | 3.82B | 3.41B |
| Revenue Growth % | 4.72% | 2.11% | 5.34% | 9.56% | 50.82% | 74.51% | -59.66% | 2.11% | 3.75% | 3.65% | 3.05% | 6.53% | 5.12% | 3.58% | 9.13% | 29.36% | 16.95% | -6.11% | 11.78% | 8.53% | 19.8% | 16.14% | 9.99% | 7.52% | -0.6% | -1.67% | 19.3% | 13.73% | 9.1% | 12.06% | 18.57% |
| Cost of Goods Sold | 24.13B | 23.17B | 23.02B | 21.87B | 19.06B | 11.68B | 10.94B | 16.45B | 15.91B | 14.89B | 14.06B | 13.42B | 14.05B | 14.21B | 14.24B | 12.95B | 9.69B | 4.67B | 3.62B | 2.59B | 5.24B | 4.21B | 3.69B | 3.35B | 3.23B | 3.15B | 2.97B | 2.52B | 2.22B | 2.2B | 2.11B |
| COGS % of Revenue | - | 82.56% | 83.78% | 83.81% | 80.05% | 73.94% | 120.89% | 73.32% | 72.42% | 70.34% | 68.86% | 67.72% | 75.51% | 80.28% | 83.35% | 82.72% | 80.06% | 45.09% | 32.82% | 26.27% | 57.65% | 55.51% | 56.46% | 56.48% | 58.55% | 56.7% | 52.49% | 53.25% | 53.34% | 57.74% | 61.87% |
| Gross Profit | 4.75B | 4.89B | 4.46B | 4.22B | 4.75B | 4.12B | -1.89B | 5.98B | 6.06B | 6.25B | 6.22B | 6.4B | 4.56B | 3.49B | 2.85B | 2.71B | 2.41B | 5.68B | 7.41B | 7.27B | 3.85B | 3.37B | 2.84B | 2.58B | 2.29B | 2.41B | 2.68B | 2.21B | 1.94B | 1.61B | 1.3B |
| Gross Margin % | 16.46% | 17.44% | 16.22% | 16.19% | 19.95% | 26.06% | -20.89% | 26.68% | 27.58% | 29.54% | 30.48% | 32.28% | 24.49% | 19.72% | 16.65% | 17.28% | 19.94% | 54.91% | 67.18% | 73.73% | 42.35% | 44.49% | 43.54% | 43.52% | 41.45% | 43.3% | 47.51% | 46.76% | 46.66% | 42.26% | 38.13% |
| Gross Profit Growth % | - | 9.78% | 5.59% | -11.13% | 15.48% | 317.72% | -131.59% | -1.24% | -3.13% | 0.47% | -2.69% | 40.41% | 30.54% | 22.67% | 5.14% | 12.1% | -57.52% | -23.25% | 1.84% | 88.96% | 14.05% | 18.68% | 10.02% | 12.89% | -4.83% | -10.39% | 21.21% | 13.97% | 20.47% | 24.17% | 15.48% |
| Operating Expenses | 3.77B | 4.47B | 4.14B | 4B | 3.73B | 2.39B | 1.93B | 3.03B | 2.85B | 2.85B | 2.7B | 2.28B | 2.33B | 2.21B | 2.22B | 2.01B | 1.43B | 5.42B | 6.96B | 6.48B | 2.91B | 2.65B | 2.29B | 2.21B | 1.95B | 1.77B | 1.66B | 1.43B | 1.26B | 1.09B | 948.03M |
| OpEx % of Revenue | - | 15.92% | 15.06% | 15.33% | 15.68% | 15.16% | 21.29% | 13.49% | 12.98% | 13.45% | 13.23% | 11.51% | 12.53% | 12.5% | 13% | 12.86% | 11.78% | 52.38% | 63.1% | 65.71% | 32.07% | 34.93% | 35.05% | 37.14% | 35.28% | 31.93% | 29.43% | 30.25% | 30.24% | 28.52% | 27.83% |
| Selling, General & Admin | 2.24B | 4.47B | 346M | 266M | 224M | 185M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4.37B | 3.7B | 3.47B | 3.34B | 3.21B | 3.71B | 3.32B | 3.03B | 2.83B | 2.58B | 1.86B | 2.15B | 2.05B | 1.7B | 1.54B | 1.52B |
| SG&A % of Revenue | - | 15.92% | 1.26% | 1.02% | 0.94% | 1.17% | - | - | - | - | - | - | - | - | - | 27.92% | 30.6% | 33.51% | 30.3% | 32.58% | 40.78% | 43.76% | 46.43% | 47.62% | 46.71% | 33.42% | 37.97% | 43.36% | 40.9% | 40.41% | 44.59% |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 2M | 0 | 3.79B | 3.73B | 3.51B | 2.21B | 1.93B | 3.03B | 2.85B | 2.85B | 2.7B | 2.28B | 2.33B | 2.21B | 2.22B | -2.36B | -2.28B | 1.95B | 3.62B | 3.27B | -791M | -670M | -743M | -622M | -631M | -82.28M | -482.7M | -620.9M | -443.67M | -453.76M | -570.87M |
| Operating Income | 981M | 428M | 321M | 224M | 1.02B | 1.72B | -3.82B | 2.96B | 3.21B | 3.41B | 3.52B | 4.12B | 2.23B | 1.28B | 623M | 693M | 988M | 262M | 449M | 791M | 934M | 725M | 554M | 379M | 341M | 631.12M | 1.02B | 782M | 683.61M | 524.24M | 350.83M |
| Operating Margin % | 3.4% | 1.53% | 1.17% | 0.86% | 4.27% | 10.9% | -42.18% | 13.18% | 14.6% | 16.09% | 17.24% | 20.77% | 11.96% | 7.22% | 3.65% | 4.43% | 8.16% | 2.53% | 4.07% | 8.02% | 10.28% | 9.56% | 8.48% | 6.38% | 6.18% | 11.36% | 18.09% | 16.51% | 16.42% | 13.73% | 10.3% |
| Operating Income Growth % | - | 33.33% | 43.3% | -77.97% | -40.91% | 145.1% | -229.05% | -7.77% | -5.9% | -3.27% | -14.43% | 84.99% | 74.1% | 105.14% | -10.1% | -29.86% | 277.1% | -41.65% | -43.24% | -15.31% | 28.83% | 30.87% | 46.17% | 11.14% | -45.97% | -38.25% | 30.69% | 14.39% | 30.4% | 49.43% | 11.9% |
| EBITDA | 2.54B | 1.99B | 1.98B | 1.75B | 2.37B | 2.99B | -2.56B | 4.18B | 4.41B | 4.63B | 4.74B | 5.13B | 3.16B | 2.15B | 1.47B | 1.41B | 1.62B | 878M | 1.05B | 1.35B | 1.45B | 1.19B | 985M | 763M | -15M | 948.95M | 1.3B | 519.6M | 908.82M | 719.8M | 534.3M |
| EBITDA Margin % | 8.81% | 7.08% | 7.2% | 6.69% | 9.94% | 18.95% | -28.3% | 18.62% | 20.06% | 21.85% | 23.22% | 25.89% | 17% | 12.12% | 8.58% | 8.99% | 13.35% | 8.48% | 9.51% | 13.65% | 15.95% | 15.74% | 15.08% | 12.85% | -0.27% | 17.08% | 23.07% | 10.97% | 21.83% | 18.86% | 15.69% |
| EBITDA Growth % | 19.1% | 0.51% | 13.29% | -26.27% | -20.88% | 216.87% | -161.33% | -5.24% | -4.71% | -2.49% | -7.56% | 62.22% | 47.46% | 46.22% | 4.19% | -12.87% | 84.05% | -16.22% | -22.14% | -7.11% | 21.36% | 21.22% | 29.1% | 5186.67% | -101.58% | -27.19% | 150.82% | -42.83% | 26.26% | 34.72% | 226.33% |
| D&A (Non-Cash Add-back) | 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 | 599M | 555M | 515M | 469M | 431M | 384M | -356M | 317.83M | 281.28M | -262.4M | 225.21M | 195.57M | 183.47M |
| EBIT | 1.16B | 676M | 812M | 869M | 1.03B | 1.76B | -3.94B | 3.04B | 3.26B | 3.33B | 3.52B | 3.57B | 1.92B | 1.32B | 811M | 505M | 894M | 329M | 383M | 1.18B | 934M | 725M | -3.72B | 379M | -3.42B | 631.12M | 1.02B | -2.18B | -1.95B | -2.09B | -2.13B |
| Net Interest Income | 23M | 92M | 283M | 347M | -84M | -418M | -282M | 8M | -24M | -30M | -51M | -81M | -100M | -101M | -119M | -172M | -137M | -152M | -79M | -25M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Income | 144M | 205M | 497M | 583M | 217M | 13M | 32M | 90M | 69M | 35M | 24M | 9M | 7M | 6M | 7M | 10M | 30M | 13M | 51M | 94M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 121M | 113M | 214M | 236M | 301M | 431M | 314M | 82M | 93M | 65M | 75M | 90M | 107M | 107M | 126M | 182M | 149M | 165M | 105M | 119M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Income/Expense | 59M | 135M | 277M | 409M | -289M | -396M | -440M | 0 | -42M | -142M | -72M | -637M | -409M | -69M | 62M | -370M | -243M | -98M | -171M | 267M | -144M | 54M | -65M | 225M | -24M | 196.54M | -4M | -8M | 21.5M | -7.28M | -9.47M |
| Pretax Income | 1.04B | 563M | 598M | 633M | 728M | 1.32B | -4.26B | 2.96B | 3.16B | 3.27B | 3.45B | 3.48B | 1.82B | 1.21B | 685M | 323M | 745M | 164M | 278M | 1.06B | 790M | 779M | 489M | 604M | 317M | 827.66M | 1.02B | 774M | 705.11M | 516.96M | 341.36M |
| Pretax Margin % | 3.6% | 2.01% | 2.18% | 2.43% | 3.06% | 8.39% | -47.04% | 13.18% | 14.4% | 15.42% | 16.89% | 17.55% | 9.76% | 6.83% | 4.01% | 2.06% | 6.16% | 1.58% | 2.52% | 10.73% | 8.69% | 10.27% | 7.49% | 10.17% | 5.74% | 14.9% | 18.02% | 16.34% | 16.93% | 13.54% | 10.02% |
| Income Tax | 223M | 122M | 133M | 168M | 189M | 348M | -1.18B | 657M | 699M | -92M | 1.27B | 1.3B | 680M | 455M | 264M | 145M | 286M | 65M | 100M | 413M | 291M | 295M | 176M | 232M | 152M | 316.51M | 392.14M | 299.2M | 271.68M | 199.18M | 134.03M |
| Effective Tax Rate % | 21.44% | 21.67% | 22.24% | 26.54% | 25.96% | 26.26% | 27.77% | 22.22% | 22.09% | -2.82% | 36.72% | 37.31% | 37.44% | 37.63% | 38.54% | 44.89% | 38.39% | 39.63% | 35.97% | 39.04% | 36.84% | 37.87% | 35.99% | 38.41% | 47.95% | 38.24% | 38.52% | 38.66% | 38.53% | 38.53% | 39.26% |
| 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 |
| Net Margin % | 2.83% | 1.57% | 1.69% | 1.78% | 2.26% | 6.19% | -33.97% | 10.26% | 11.22% | 16.48% | 10.99% | 11% | 6.11% | 4.26% | 2.46% | 1.14% | 3.79% | 0.96% | 1.61% | 6.54% | 5.49% | 7.23% | 4.79% | 7.44% | 4.36% | 9.2% | 10.67% | 10.02% | 10.41% | 8.33% | 6.09% |
| Net Income Growth % | 49.63% | -5.16% | 0% | -13.73% | -44.83% | 131.78% | -233.65% | -6.69% | -29.33% | 55.44% | 2.89% | 91.99% | 50.66% | 79.1% | 136.52% | -61.22% | 363.64% | -44.38% | -72.4% | 29.26% | -8.94% | 75.08% | -29.19% | 83.43% | -52.86% | -15.25% | 27.13% | 9.45% | 36.4% | 53.26% | 13.53% |
| Net Income (Continuing) | 817M | 441M | 465M | 465M | 539M | 977M | -3.07B | 2.3B | 2.46B | 3.36B | 2.18B | 2.18B | 1.14B | 754M | 421M | 178M | 459M | 99M | 178M | 645M | 499M | 548M | 313M | 372M | 241M | 511.15M | 626M | 474.4M | 433.4M | 317.77M | 207.34M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 1.62 | 0.79 | 0.75 | 0.76 | 0.87 | 1.61 | -5.44 | 4.27 | 4.29 | 5.78 | 3.55 | 3.26 | 1.63 | 1.05 | 0.56 | 0.23 | 0.61 | 0.13 | 0.24 | 0.84 | 0.61 | 0.68 | 0.38 | 0.55 | 0.24 | 0.63 | 0.76 | 0.59 | 0.55 | 0.41 | 0.27 |
| EPS Growth % | 82.35% | 5.33% | -1.32% | -12.64% | -45.96% | 129.6% | -227.4% | -0.47% | -25.78% | 62.82% | 8.9% | 100% | 55.24% | 87.5% | 143.48% | -62.3% | 369.23% | -45.83% | -71.43% | 37.7% | -10.29% | 78.95% | -30.91% | 129.17% | -61.9% | -17.11% | 28.81% | 7.27% | 34.15% | 51.85% | 8% |
| EPS (Basic) | - | 0.82 | 0.81 | 0.81 | 0.91 | 1.65 | -5.44 | 4.28 | 4.30 | 5.80 | 3.58 | 3.30 | 1.65 | 1.06 | 0.56 | 0.23 | 0.62 | 0.13 | 0.24 | 0.85 | 0.63 | 0.69 | 0.40 | 0.57 | 0.24 | 0.67 | 0.81 | 0.63 | 0.58 | 0.43 | 0.27 |
| Diluted Shares Outstanding | 503M | 558M | 643M | 640M | 642M | 609M | 565M | 539M | 574M | 603M | 633M | 669M | 696M | 718M | 757M | 775M | 747M | 741M | 739M | 767.86M | 818.03M | 806.67M | 823.68M | 808.7M | 1B | 811.34M | 792.41M | 805.08M | 792.86M | 766.06M | 779.13M |
| Basic Shares Outstanding | 498M | 540M | 598M | 595M | 593M | 592M | 565M | 538M | 573M | 601M | 627M | 661M | 687M | 710M | 750M | 774M | 746M | 741M | 735M | 758.82M | 792.06M | 793.44M | 782.5M | 775M | 1B | 762.91M | 745.24M | 753.97M | 747.29M | 739.64M | 766.16M |
| Dividend Payout Ratio | - | 90.48% | 92.47% | 92.04% | - | - | - | 16.17% | 13.47% | 7.86% | 9.89% | 8.25% | 12.24% | 9.42% | 5.23% | 7.87% | 2.83% | 13.13% | 7.3% | 2.17% | 2.81% | 2.55% | 4.47% | 3.17% | 5.76% | 2.63% | 1.82% | 2.28% | 2.14% | 2.07% | 3% |
Operational Margin Erosion
According to recent financial filings, LUV experienced a 12.8% revenue growth in 2026Q1, yet this follows a period of inconsistent performance where quarterly growth fluctuated between a 1.5% contraction and a 12.8% expansion, highlighting the company's sensitivity to domestic travel demand cycles and seasonal booking patterns.
The recent uptick in top-line growth suggests a potential recovery in passenger volume, though the lack of consistent sequential momentum warrants caution. Investors should monitor whether this growth is driven by sustainable pricing power or merely a rebound from previous operational disruptions that suppressed capacity.
As reported in quarterly income statements, LUV's operating margin has remained thin, reaching only 4.6% in 2026Q1, which reflects the ongoing difficulty in maintaining historical profitability levels amidst rising labor costs and the operational inefficiencies associated with managing an aging, single-type fleet configuration.
The compression of operating margins compared to historical norms suggests that the company's traditional low-cost advantage is being eroded by industry-wide wage inflation. The inability to consistently scale operating income faster than revenue indicates that the current cost structure may be structurally higher than previously anticipated.
Based on the provided income statement data, COGS remains the dominant expense, consistently consuming over 80% of revenue in most quarters, which underscores the company's vulnerability to fuel price volatility and the high fixed-cost nature of maintaining a massive, uniform Boeing 737 fleet.
The persistent high level of COGS relative to revenue suggests that management's ability to drive operational leverage is currently limited. Without significant improvements in fuel efficiency or fleet modernization, the company may continue to struggle with maintaining the cost discipline that historically defined its competitive moat.
Financial data indicates that LUV's net margin has frequently dipped into negative territory, such as the -3.6% reported in 2024Q1, suggesting that the company's current business model may be increasingly susceptible to cyclical downturns and the loss of its historical pricing power in domestic markets.
Short-term profitability improvements may be masking deeper issues regarding the company's transition to a mid-cost operator. If the company cannot successfully implement new revenue streams like assigned seating to offset rising expenses, the risk of sustained margin compression appears significant.
Quick answers to the most common questions about buying LUV stock.
For fiscal year 2025, Southwest Airlines Co. (LUV) reported total revenue of $28.06B. This represents a 723.9% increase compared to $3.41B in 1996.
Southwest Airlines Co. (LUV) is profitable, generating $441.0M in net income for the fiscal year ending 2025 with a net profit margin of 1.6%.
Southwest Airlines Co. (LUV) reported an operating income of $428.0M, resulting in an operating profit margin of 1.5%. This margin reflects the operational efficiency of the business before interest and taxes.
Southwest Airlines Co. (LUV) generated $4.89B in gross profit for the year, representing a gross profit margin of 17.4%. This demonstrates the company's core pricing power and production efficiency.