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- **Record Revenue Growth**: Third-quarter revenue driven by 2% capacity growth and strong demand since July, with assigned seating contributing a 4-point NPS improvement.
- **EBIT Guidance Confidence**: Full-year EBIT target of $600M-$800M reaffirmed, with Q4 expected to deliver all-time revenue record.
- **Assigned Seating Ramp-Up**: $1B EBIT contribution in 2026, scaling to $1.5B by 2027, supported by strong early bookings for January 2026.
- **Cost Discipline**: CASM-X up 2.5% in Q3, beating guidance, with continued focus on cost savings across operations.

**【CEO Summary Section】**
- Southwest Airlines reported record third-quarter revenue, driven by a 2-point year-over-year increase in capacity and strong demand since early July. The rollout of assigned extra legroom seating in July contributed to a 4-point improvement in customer Net Promoter Scores.
- Management emphasized confidence in hitting the full-year EBIT guidance of $600 million to $800 million, despite macroeconomic uncertainties. The company expects to deliver an all-time quarterly revenue record in the fourth quarter.
- Strategic initiatives include free WiFi for Rapid Rewards members, expansion into new markets (e.g., Alaska, Knoxville), and a $1 billion incremental EBIT contribution from assigned seating in 2026, ramping to $1.5 billion by 2027.

**【CFO Financial Commentary】**
- Third-quarter CASM-X (cost per available seat mile excluding fuel) increased 2.5%, beating the midpoint of guidance by 2 points, reflecting strong cost discipline.
- Capital spending for 2025 is expected to be between $2.5 billion and $3 billion, with liquidity maintained at $3 billion, within the target range of $3 billion to $4.5 billion.
- The company executed a $250 million accelerated share repurchase under its $2 billion authorization, signaling confidence in long-term value.

**【Q&A Highlights】**
- **Capacity Growth & RASM Guidance**: Fourth-quarter capacity growth of 6% is expected, with RASM (revenue per available seat mile) up 1% to 3% year-over-year. Management attributed the cautious outlook to the ongoing government shutdown and macroeconomic uncertainty.
- **Assigned Seating Impact**: The rollout of assigned extra legroom seating is on track to contribute $1 billion in 2026, with full run-rate of $1.5 billion by 2027. Early bookings for January 2026 show strong customer interest in premium seating.
- **Cost Discipline**: CASM-X is expected to remain flat to up 1% in the fourth quarter, excluding fleet transactions. The company is actively managing costs across all departments, including supply chain and technology optimizations.
- **Government Shutdown Risk**: Management acknowledged the potential impact of the government shutdown on business travel demand but remains confident in hitting EBIT targets through operational excellence and initiative execution.

Southwest Airlines Co. (LUV) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

LUV

LUV fundamentals

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