Research · Sep 3, 2026
Southwest Airlines (LUV) FY25 (Dec) revenue $28.063B (+2.1%, record); op income $428M (+33%); full-year EBIT $574M (above $500M guide); adj EPS $0.93 (+24%); OCF $1.842B (+299%); FCF -$831M (improving); total debt $5.981B (-25.8%); $2.55B buybacks FY25. Transformation initiatives: bag fees launched May 28 2025 (take rates above expectations); extra legroom seating (~25% fleet retrofitted Q2 FY25; $1B incremental EBIT FY26, $1.5B FY27 run rate); assigned seating launched late 2025/Jan 2026; Starlink WiFi (300+ aircraft by end 2026); Chase co-brand card renegotiation; Priceline/EVA Air partnerships. Q1 FY26 actual: EPS $0.45 (vs loss Q1 FY25); op margin 4.6% (+810bp); record Q1 revenues; March = largest revenue month in history. FY26 adj EPS guide: 'at least $4' (+330%+ vs $0.93 FY25). Q2 FY26 guide: EPS $0.35-$0.65; RASM +16.5-18.5%. CASM-X FY26 +3.5%. Capacity +1-2%. Risks: fuel, execution, competition, RASM sustainability, Boeing delays, macro.
Research · Apr 28, 2026
Airlines are raising fares and cutting forecasts as Iran conflict-driven jet fuel costs spike heading into summer 2026. United's "uncharted territory" comment and Alaska Air's confirmation that fares won't drop signal 10-20% fare increases are underway — but demand response remains uncertain. Short AAL into Q2 earnings as its leveraged balance sheet and weak pricing power leave it most exposed if summer bookings decline >8% YoY.
Research · Apr 23, 2026
Southwest's fuel cost warning has been mispriced as sector-wide pain. The $100 per long-haul flight cost surge hits Delta, American and United 3-14x harder than domestic-focused Southwest and Alaska due to international route exposure. Short long-haul carriers against domestic operators targets 5-10% relative return over 90 days as Q2 earnings reveal the gap.
Research · Apr 23, 2026
Persistent $150 crude jet fuel prices create a zero-sum margin transfer: airlines lose 8-10% operating income while refiners gain 12-15%. The market's focus on passenger surcharges misses the structural asymmetry. Long VLO/MPC paired with AAL/LUV targets +10-15% relative return over 3-6 months, breaking if jet fuel reverts to $90 by September or airlines outperform refiners by 5%+ over 120 days.
Research · Apr 13, 2026
US airlines' lack of fuel hedges exposes them to the April 12 Hormuz blockade-driven oil spike; JBLU and AAL most vulnerable due to losses/debt, while Delta's refinery offers protection. Ranked analysis of six carriers with financials shows clear hierarchy of pain.
Research · Apr 13, 2026
Strait of Hormuz blockade spikes oil, threatening 2026 summer airfares and airline margins. Delta's refinery edge positions it best; high-debt AAL vulnerable. Expect 15-25% fare hikes but demand risks.
Research · Apr 9, 2026
DOT Secretary Duffy's endorsement of more airline M&A highlights consolidation opportunities as weaker carriers falter. Delta and United lead winners with strong balance sheets and premium strategies, while JetBlue and Allegiant face risks. Ranked picks favor low-leverage majors for market share gains.
