Southwest Airlines Reports Strong Q3 Results

U.S.-based low-cost carrier Southwest Airlines Co (NYSE: LUV) reported strong third-quarter financial performance, including record operating and unit revenues, solid margins and strong cash flows. That is despite an estimated $210 million reduction in operating income due to the continued grounding of Boeing 737 MAX aircraft.

Southwest reported $42 million in revenue from cargo operations, a 2.3% slide from the $43 million posted for the same quarter in 2018.

The carrier posted record net income and earnings per diluted share of $659 million and $1.23, respectively, record operating revenues of $5.6 billion, an operating margin of 14.5% and net margin of 11.7%.

Results also reflected operating cash flow of $1.1 billion and free cash flow of $716 million. Southwest returned $596 million to shareholders through share repurchases and dividends.

Southwest reported ongoing discussions with Boeing Co (NYSE: BA) concerning compensation for damages related to the 737 MAX groundings. Operating income reduction from the groundings is estimated to be $435 million for the nine months ended Sept. 30, and the carrier expects the damages to continue to grow into 2020.

As of Sept. 30, Southwest had approximately $4 billion in cash and short-term investments and a $1 billion fully available unsecured revolving credit line.

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