Southwest Airlines Reports Strong Q3 Results

U.S.-based low-cost carrier Southwest Airlines Co 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 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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