Southwest Airlines Company (LUV)
Interest coverage
| 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 |
| Interest expense (ttm) | US$ in thousands | 30,000 | 104,000 | 172,000 | 240,000 | 242,000 | 254,000 | 270,000 | 292,000 | 316,000 | 375,000 | 406,000 | 432,000 | 451,000 | 441,000 | 435,000 | 416,000 | 336,000 | 240,000 | 170,000 | 112,000 |
| Interest coverage | -0.13 | -3.47 | -1.64 | 0.48 | 0.93 | 0.96 | 1.93 | 3.03 | 3.22 | 4.26 | 4.77 | 3.17 | 3.82 | 0.81 | -4.11 | -8.43 | -11.36 | -8.14 | 1.81 | 21.72 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-4,000K ÷ $30,000K
= -0.13
Interest coverage ratio is a financial metric used to evaluate a company's ability to meet its interest obligations based on its earnings before interest and taxes (EBIT). A higher ratio indicates the company is more capable of covering its interest expenses.
The interest coverage ratio for Southwest Airlines Company fluctuated over the periods provided. In March 2020, the interest coverage was strong at 21.72, indicating that the company's earnings were 21.72 times higher than its interest expenses. However, the ratio declined significantly in subsequent periods, reaching negative values in September 2020 (-8.14) and continuing to stay negative until September 2021.
From December 2021 onwards, the interest coverage ratio started to improve, indicating better ability to cover interest expenses. The ratio showed a positive trend, reaching 4.77 in June 2022, and staying above 3 in the subsequent quarters.
Despite experiencing some fluctuations, Southwest Airlines Company managed to improve its interest coverage ratio over the periods provided, reflecting a stronger ability to meet its interest obligations with its earnings. Investors and creditors typically view a higher interest coverage ratio positively as it suggests a lower risk of default due to insufficient earnings to cover interest expenses.
Peer comparison
Dec 31, 2024