# Southwest Airlines (LUV) Forecast Calculator

Interactive five-year financial forecast and DCF for Southwest Airlines. Adjust revenue growth, margins, capex, and WACC to update revenue, free cash flow, and enterprise value.

- Canonical: https://finamodel.com/companies/southwest-airlines/forecast
- Industry: Industrials
- Forecast start year: 2026

## Historical data

| Year | Revenue | Free cash flow | EBITDA | Net income |
|---:|---:|---:|---:|---:|
| 2021 | 22428000000 | 2960000000 | 4176000000 | 2300000000 |
| 2022 | 9048000000 | -1642000000 | -2561000000 | -3074000000 |
| 2023 | 15790000000 | 1817000000 | 2993000000 | 977000000 |
| 2024 | 23814000000 | -134000000 | 2368000000 | 539000000 |
| 2025 | 26091000000 | -356000000 | 1746000000 | 465000000 |

## Frequently asked questions

### What is Southwest Airlines' core business model?

Southwest Airlines operates as a major US passenger airline, primarily utilizing a low-cost carrier (LCC) model focused on domestic point-to-point transit. Historically, it was known for a single aircraft type, open seating, and a "Bags Fly Free" policy, but is undergoing a significant strategic transformation.

### What are the primary revenue streams for Southwest Airlines?

Southwest Airlines generates most of its revenue from passenger fares, accounting for approximately 89% of its total. Other significant revenue sources include its Rapid Rewards program, EarlyBird check-in, and various ancillary fees, making up about 10%.

### What is Southwest Airlines' capital expenditure strategy?

Southwest Airlines' capital expenditure typically ranges from 8-12% of its revenue, heavily skewed towards fleet modernization. Significant capex programs are underway, including aircraft deliveries and a massive cabin retrofitting initiative to install premium seating across its fleet.

### How does Southwest Airlines' balance sheet structure impact its financial model and valuation?

Southwest Airlines has a structurally negative net working capital profile, benefiting from upfront ticket sales which fund operations. Its balance sheet is asset-heavy, with Property and Equipment (primarily owned aircraft) being the largest asset class, alongside substantial cash reserves.

### What is the assumed revenue growth rate in the Southwest Airlines financial model?

The financial model for Southwest Airlines assumes a revenue growth rate of approximately 3.85%. This projection helps quantify the financial impact of the company's strategic transformation planned for 2025/2026.

### Can I download an Excel financial model for Southwest Airlines?

Yes, a downloadable Excel financial model for Southwest Airlines is available. This model evaluates the equity valuation and cash flow generation, with a forecast horizon extending from FY2026 to FY2030.