### Southwest Airlines Reports Strong Q3 Revenue Growth Amid Leadership Changes

Southwest Airlines Co LUV experienced notable revenue growth in the third quarter of 2024, with a 5.3% year-over-year increase, amounting to $6.87 billion. This figure surpassed the analysts' consensus estimate of $6.735 billion. Despite the revenue boost, the airline's adjusted EPS fell to $0.11 from $0.31 the previous year, although it still exceeded the anticipated break-even point.

The airline’s operating income took a significant hit, decreasing from $224 million last year to $32 million. This decline was attributed to a 14.3% rise in operating expenses, which reached $5.384 billion. Nevertheless, unit revenue saw a 2.8% year-over-year increase, with revenue passenger miles and available seat miles up by 3.1% and 2.4%, respectively. The load factor slightly improved from 80.7% to 81.2%.

In terms of cost management, Southwest's CASM-X increased by 11.6%, aligning with company guidance. Efforts to control costs included measures like voluntary time off and restricted hiring. Fuel costs declined by 8.2% year-over-year, averaging $2.55 per gallon, with notable enhancements in fuel efficiency, partly owing to an increased percentage of -8 aircraft in the fleet.

As of the end of September, the Dallas-based airline held a net cash position of $1.4 billion, with liquidity at $10.4 billion, which is higher than its $8 billion outstanding debt. The company generated an operating cash flow of $113 million for the third quarter, a sharp drop from $616 million during the same period last year.

Southwest Airlines also announced significant leadership changes. Executive Chairman Gary Kelly is set to retire on November 1, 2024, transitioning to Chairman Emeritus. In a strategic move through agreements with Elliott Management, six new independent directors will join the board, including notable figures such as David Cush, Sarah Feinberg, and former Chevron CFO Pierre Breber. By the Annual Shareholder Meeting in 2025, the board will consist of 13 members, following the retirement of six other directors.

Looking ahead to the fourth quarter of 2024, Southwest anticipates revenue per available seat mile (RASM) to increase by 3.5% to 5.5% year-over-year. Available seat miles are expected to decline by approximately 4%, with CASM-X rising between 11% and 13%. The company predicts economic fuel costs to range from $2.25 to $2.35 per gallon.

Despite the positive revenue report, Southwest shares were trading 1.33% lower at $30.32 in premarket activity as of the latest check on Thursday.