Southwest Airlines Company (LUV)

Operating return on assets (Operating ROA)

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Operating income	US$ in thousands	321,000	224,000	1,017,000	1,721,000	-3,816,000
Total assets	US$ in thousands	33,750,000	36,487,000	35,369,000	36,320,000	34,588,000
Operating ROA		0.95%	0.61%	2.88%	4.74%	-11.03%

December 31, 2024 calculation

Operating ROA = Operating income ÷ Total assets
= $321,000K ÷ $33,750,000K
= 0.95%

Operating Return on Assets (Operating ROA) is a profitability ratio that measures how effectively a company generates profit from its assets used in operations. For Southwest Airlines Company, the Operating ROA has fluctuated over the years as follows:

- As of December 31, 2020, the Operating ROA was -11.03%, indicating that the company was generating a negative return on its assets used in operations. This could be a concerning sign highlighting inefficiencies in asset utilization.

- By December 31, 2021, Southwest Airlines improved its Operating ROA to 4.74%, a substantial increase from the previous year. This indicates that the company became more efficient in generating profit from its assets.

- However, by December 31, 2022, the Operating ROA slightly declined to 2.88%. While still positive, this decrease suggests that Southwest Airlines may have faced challenges in maintaining the same level of profitability from its assets.

- The trend continued to December 31, 2023, with the Operating ROA further decreasing to 0.61%. This significant drop raises concerns about the company's ability to efficiently utilize its assets to generate profit.

- Finally, by December 31, 2024, the Operating ROA slightly improved to 0.95%, indicating a slight recovery in asset profitability. However, the ratio is still relatively low compared to previous years.

In summary, Southwest Airlines Company's Operating ROA has shown a mix of positive and negative trends over the years, with fluctuations indicating varying levels of efficiency in generating profit from its assets used in operations. Further analysis of the company's operational performance and asset management strategies may be necessary to understand the underlying factors contributing to these fluctuations.