Southwest Airlines Company (LUV)

Return on equity (ROE)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	US$ in thousands	465,000	539,000	977,000	-3,074,000	2,300,000
Total stockholders’ equity	US$ in thousands	10,515,000	10,687,000	10,414,000	8,876,000	9,832,000
ROE		4.42%	5.04%	9.38%	-34.63%	23.39%

December 31, 2023 calculation

ROE = Net income ÷ Total stockholders’ equity
= $465,000K ÷ $10,515,000K
= 4.42%

Southwest Airlines Co's return on equity (ROE) has shown fluctuations over the past five years. In 2023, the ROE stood at 4.42%, which was a decrease from the previous year's 5.04%. This decline indicates a less efficient utilization of equity in generating profits.

Comparing the ROE in 2023 to that of 2019, there has been a significant decrease in performance. The ROE plummeted from a high of 23.39% in 2019 to a mere 4.42% in 2023. This suggests a substantial decline in the company's ability to generate profits from shareholders' equity over the years.

The negative ROE of -34.63% in 2020 stands out as a low point in the company's profitability performance. This indicates that the company suffered a net loss for the year and was not able to generate returns on shareholders' equity.

Overall, Southwest Airlines Co's ROE has shown volatility and inconsistency in recent years, reflecting challenges in effectively utilizing equity to generate profits. The company may need to focus on improving its operational efficiency and financial performance to enhance its return on equity in the future.