Southwest Airlines Company (LUV)

Return on equity (ROE)

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Net income (ttm)	US$ in thousands	465,000	497,000	581,000	658,000	539,000	827,000	996,000	584,000	978,000	2,000	-1,601,000	-2,864,000	-3,074,000	-1,652,000	164,000	1,820,000	2,301,000	2,441,000	2,397,000	2,389,000
Total stockholders’ equity	US$ in thousands	10,515,000	11,054,000	10,789,000	10,302,000	10,687,000	10,924,000	11,120,000	10,417,000	10,414,000	10,250,000	9,688,000	9,093,000	8,876,000	9,769,000	10,878,000	9,075,000	9,832,000	9,931,000	9,940,000	9,791,000
ROE		4.42%	4.50%	5.39%	6.39%	5.04%	7.57%	8.96%	5.61%	9.39%	0.02%	-16.53%	-31.50%	-34.63%	-16.91%	1.51%	20.06%	23.40%	24.58%	24.11%	24.40%

December 31, 2023 calculation

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

Southwest Airlines Co's return on equity (ROE) has shown some variability over the past eight quarters. The ROE ranged from a low of 4.42% in Q4 2023 to a high of 8.95% in Q2 2022. This indicates fluctuations in the company's ability to generate profits from shareholders' equity during this period.

The downward trend in ROE from Q2 2022 through Q4 2023 is worth noting, as it declined from 8.95% to 4.42%. This may raise concerns about the company's profitability and efficiency in utilizing its equity to generate earnings for shareholders.

A low ROE may suggest that the company is not effectively using its equity to generate profits, which could be due to factors such as high debt levels, weak earnings growth, or inefficient asset utilization. It is crucial for Southwest Airlines Co to closely monitor and address the factors contributing to the decline in ROE to improve overall financial performance.

Overall, Southwest Airlines Co's ROE performance indicates the need for further analysis and strategic measures to enhance profitability and efficiency in utilizing shareholders' equity.