Southwest Airlines Company (LUV)
Return on total capital
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | -4,000 | -361,000 | -282,000 | 115,000 | 224,000 | 243,000 | 521,000 | 884,000 | 1,017,000 | 1,597,000 | 1,935,000 | 1,371,000 | 1,721,000 | 357,000 | -1,787,000 | -3,508,000 | -3,817,000 | -1,953,000 | 307,000 | 2,433,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 10,350,000 | 10,411,000 | 10,465,000 | 10,196,000 | 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 |
| Return on total capital | -0.04% | -3.47% | -2.69% | 1.13% | 2.13% | 2.20% | 4.83% | 8.58% | 9.52% | 14.62% | 17.40% | 13.16% | 16.53% | 3.48% | -18.45% | -38.58% | -43.00% | -19.99% | 2.82% | 26.81% |
December 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $-4,000K ÷ ($—K + $10,350,000K)
= -0.04%
The return on total capital for Southwest Airlines Company has shown significant fluctuations over the period from March 2020 to December 2024. The ratio represents the company's ability to generate profits from the total capital employed in its operations.
Southwest Airlines' return on total capital was strong at 26.81% in March 2020, indicating efficient utilization of its capital to generate returns. However, the ratio declined sharply to 2.82% in June 2020 and turned negative in the following quarters, reaching as low as -43.00% in December 2020. These negative values suggest that the company's capital was not effectively generating returns during this period.
There was some improvement in Southwest Airlines' return on total capital starting from the third quarter of 2021 when the ratio turned positive again at 3.48%. The ratio then showed a gradual increase, reaching a peak of 17.40% in June 2022, indicating a better utilization of capital to generate profits.
However, the return on total capital started to decline again after June 2022, with values fluctuating around single-digit percentages. By December 2024, the ratio had dropped to -0.04%, reflecting a decrease in the company's ability to generate profits from its total capital.
Overall, Southwest Airlines Company experienced varying levels of return on total capital during the period under review, with both strong positive and negative values. This indicates fluctuations in the company's profitability and efficiency in capital utilization over the years.
Peer comparison
Dec 31, 2024