Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 26 Nov, 25 | LUV | Buy | USD 34.85 | USD 37.0 | USD 40.0 | 14 days | Closed |
12.40%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Southwest Airlines Co. operates as a passenger airline company that provide scheduled air transportation services in the United States and near-international markets. As of December 31, 2022, the company operated a total fleet of 770 Boeing 737 aircrafts; and served 121 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as ten near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. It also provides inflight entertainment portal and connectivity services on Wi-Fi enabled aircrafts; and Rapid Rewards loyalty program that enables program members to earn points for dollars spent on Southwest base fares. In addition, the company offers a suite of digital platforms to support customers' travel needs, including websites and apps; and SWABIZ, an online booking tool. Further, it provides ancillary services, such as Southwest's EarlyBird Check-In, upgraded boarding, and transportation of pets and unaccompanied minors. The company was incorporated in 1967 and is headquartered in Dallas, Texas.
Growth in Total Operating Revenues: Total operating revenues increased to USD 6,949 million in Q3 FY25 from USD 6,870 million in Q3 FY24, reflecting a year-over-year rise of USD 79 million
Decline in Fuel and Oil Expense: The company reported fuel and oil costs of USD 1,331 million in Q3 FY25, compared with USD 1,417 million in the prior-year quarter, marking a reduction of USD 86 million year-over-year
Decline in Net Income: Net income decreasing to USD 54 million in Q3 FY25 from USD 67 million in Q3 FY24, representing a decline of USD 13 million
Increase in Salaries, Wages and Benefits: Salaries, wages and benefits totaled USD 3,219 million for the quarter, rising from USD 3,070 million in Q3 FY24—an increase of USD 149 million year-over-year
Southwest faces key investment risks including sustained labor cost inflation, execution risk around multi-year operational and product transformations, competitive pricing pressure, and macro-sensitive demand volatility amplified by policy events such as government shutdowns
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 34.85 | 30.0 | 37.0 | 40.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Revenue Performance Strengthens: Southwest Airlines reported a modest improvement in operating revenues for Q3 FY25, reaching USD 6.949 billion, compared with USD 6.870 billion in Q3 FY24, reflecting stable passenger demand and stronger ancillary contributions. Passenger revenue increased slightly to USD 6.313 billion from USD 6.250 billion, supported by enhancements in fare segmentation, loyalty engagement, and improved connectivity. Management highlighted that Q3 FY25 delivered a record third-quarter revenue performance, attributable to sustained demand recovery beginning in early July and strong traction from new commercial initiatives.
Operational Reliability and Customer Initiatives: The company achieved measurable operational improvements during the quarter, maintaining industry-leading reliability despite weather-related challenges and infrastructure disruptions. Operational enhancements included process improvements, better disruption management and rollout of a refreshed cabin experience with larger overhead bins, in-seat power and updated lighting. The introduction of assigned and extra-legroom seating progressed smoothly, and early indicators showed a 4-point improvement in customer Net Promoter Score on configured aircraft.
Expansion of Product and Distribution Capabilities: Southwest expanded its product portfolio and distribution channels meaningfully in Q3 FY25. The airline introduced assigned seating and extra-legroom options, launched a co-branded free-WiFi program for Rapid Rewards members, added partnerships with Priceline and EVA Air, and launched its in-house vacation platform, “Getaways by Southwest”. Network expansion announcements included Knoxville, Santa Rosa, St. Maarten and the carrier’s first-ever service to Alaska (Anchorage), all beginning in 2026.
Cost Management and CASM Progress: The quarter demonstrated effective cost discipline, with CASM-X increasing 2.5%, outperforming guidance by two points as per management commentary . Total operating expenses increased slightly to USD 6.914 billion from USD 6.832 billion in Q3 FY24, driven primarily by higher salaries and wages, airport rentals, and other operating costs . Fuel costs declined meaningfully due to hedging portfolio closure and lower market prices, partially offsetting upward labor pressures.
Profitability and Earnings: Operating income for Q3 FY25 totaled USD 35 million, compared with USD 38 million in Q3 FY24, while net income declined to USD 54 million from USD 67 million a year earlier, largely due to higher labor costs and non-operating items . Management reaffirmed full-year EBIT guidance of USD 600–800 million, reflecting confidence in both cost execution and commercial initiative ramp-up.
Liquidity, Balance Sheet and Capital Deployment: Southwest ended the quarter with USD 2.9 billion in cash and equivalents, aligned with its liquidity target when including revolver capacity. The airline continued deleveraging, ending Q3 FY25 with a gross leverage ratio of 2.1x, inside its target range. Capital expenditures are expected between USD 2.5–3.0 billion for FY25. Shareholder returns resumed via an accelerated share repurchase program totaling USD 250 million, reflecting management’s confidence in the transformation plan.
Strategic Transformation Outlook: Management emphasized that the pace of strategic transformation has accelerated, with initiatives targeting improved product differentiation, expanded distribution, and enhanced loyalty economics. The company expects over USD 1 billion incremental EBIT in 2026 from assigned and extra-legroom seating, ramping to USD 1.5 billion in 2027, along with a full year of bag-fee revenue benefits. These initiatives are positioned to drive meaningful revenue, margin and customer experience improvement through 2026–2027.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Southwest Airlines Company (NYSE: LUV) at the closing market price of USD 34.85, as on Nov 26,2025 at 8:30 am PST.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industrials Industry: Airlines
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| LUV Southwest Airlines Company |
1.50 3.01% | 51.13 | 36.42 | 10.89 | 0.68 | 1.57 | 0.58 | 6.34 |
| RYAAY Ryanair Holdings PLC ADR |
-1.345 1.87% | 70.72 | 13.54 | 12.12 | 2.42 | 3.76 | 1.88 | 7.44 |
| DAL Delta Air Lines Inc |
1.40 2.03% | 70.48 | 7.76 | 5.87 | 0.45 | 2.81 | 0.83 | 8.98 |
| AICAF Air China Limited |
- -% | 0.89 | - | 26.74 | 0.14 | 1.75 | 2.02 | 67.07 |
| BABWF International Consolidated Airlines Group S.A. |
- -% | 5.54 | 6.13 | 5.40 | 0.61 | 2.60 | 0.80 | 3.76 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on November 26, 2025. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
This report has been issued by StockNextt which has an Ontario Business Identification Number 1000958347 and British Columbia registration Number FM1051529 is a trade name under Kalkine Canada Advisory Services Inc. having Business Number 761925130BC0001. Kalkine Canada Advisory Services Inc. and StockNextt are collectively referred to as “StockNextt”, “we”, “us”, and “our”. The website https://stocknextt.com and associated pages are published by StockNextt. The information in this report and on the StockNextt website has been prepared from a wide variety of sources, which StockNextt, to the best of its knowledge and belief, considers accurate. StcokNextt has made every effort to ensure the reliability of information contained in its reports, newsletters, and websites. All information represents our views at the date of publication and may change without notice. The information in this report does not constitute an offer to sell securities or other financial products or a solicitation of an offer to buy securities or other financial products. Our reports contain general recommendations for investing in securities and other financial products. StockNextt does not offer financial advice based upon your personal financial situation or goals, and we shall not be held liable for any investment or trading losses you may incur by using the opinions expressed in our reports, publications, market updates, news alerts and corporate profiles. StockNextt does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. StockNextt’s general advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested. Please also read our Terms and conditions for further information. Employees and/or associates of StockNextt and its related entities may hold an interest in the securities or other financial products covered in this report or on the StockNextt website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.
Copyright © 2026 Krish Capital Pty Ltd. All rights reserved. No part of this website, or its content, may be reproduced in any form without our prior consent.
