Southwest Airlines Company (LUV)
Interest coverage
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 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 | 3,078,000 | 3,232,000 | 3,202,000 | 3,196,000 |
| Interest expense (ttm) | US$ in thousands | 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 | 120,000 | 124,000 | 127,000 | 129,000 |
| Interest coverage | 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 | 25.65 | 26.06 | 25.21 | 24.78 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $224,000K ÷ $242,000K
= 0.93
Southwest Airlines Co's interest coverage ratio experienced significant fluctuations over the past eight quarters. In Q1 2022, the interest coverage ratio was -0.35, indicating that the company's earnings were not sufficient to cover its interest expenses. This suggests a risky financial position, as the company may have been struggling to meet its debt obligations.
However, there was a noticeable improvement in Q2 2022, with the interest coverage ratio increasing to 3.36. This indicates that the company's earnings were able to cover its interest expenses more comfortably during this period. The trend continued in Q3 2022, with the interest coverage ratio further improving to 6.48.
The most significant improvement was seen in Q4 2022, where the interest coverage ratio surged to 12.11. This indicates a strong ability to cover interest expenses with earnings, reflecting a more stable financial position for Southwest Airlines Co.
It's worth noting that there is missing data for interest coverage in 2023, so we are unable to provide a detailed analysis for those quarters. Nonetheless, the trend observed from Q1 2022 to Q4 2022 suggests that Southwest Airlines Co has made significant improvements in its ability to cover interest expenses with earnings over the past few quarters.
Peer comparison
Dec 31, 2023