Southwest Airlines Co.

Worth knowing

• Profitable, but burning cash. Reports a profit, but free cash flow is negative.

  Southwest Airlines reports a profit but its free cash flow is negative: it spent more on investment and running the business than it brought in. That's common for companies building capacity, but it means the profit isn't yet turning into cash.

• Paying shareholders without free cash flow. Paid out $4.1B over the 3 fiscal years to 2025 with -$2.8B of free cash flow.

  Southwest Airlines returned $4.1B in buybacks and dividends over three fiscal years while its free cash flow totalled -$2.8B. The money came from its cash pile or from borrowing.

• Valuation signals disagree. Cheaper than 72% of peers on operating cash profit (EBITDA), but only 0% on free cash flow.Cheaper than 72% of peers on operating cash profit, but only 0% on free cash flow.

  Relative to its operating cash profit (EBITDA), Southwest Airlines looks cheaper than 72% of peers; relative to its free cash flow, cheaper than only 0%. The valuation score blends the two, so look at which measure fits this business best.Relative to its operating cash profit, Southwest Airlines looks cheaper than 72% of peers; relative to its free cash flow, cheaper than only 0%. The valuation score blends the two, so look at which measure fits this business best.

• Sales growing faster than profits. Since 2022: revenue +18%, operating profit −58%.

  Since 2022, Southwest Airlines's revenue changed +18% while operating profit fell 58%: costs rose faster than sales.