Is Southwest Airlines’ (LUV) Expanded Global Reach Recasting Its Capital Allocation Priorities?

• In late October 2025, Southwest Airlines reported third-quarter earnings, reaffirmed full-year EBIT guidance, expanded its global ticketing reach through an interline agreement with Hahnair, and completed over US$1.49 billion in fixed-rate, callable, unsecured note offerings due in 2028 and 2035.
• This move not only signals Southwest’s ongoing focus on international market presence but also highlights increased capital management activity through significant share buybacks and debt issuance.
• We'll explore how Southwest's partnership with Hahnair to broaden overseas ticket sales could influence its future investment narrative.

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Southwest Airlines Investment Narrative Recap

To be a shareholder of Southwest Airlines right now, you need to believe in the carrier’s ability to leverage new international partnerships and maintain operational efficiency to overcome variable booking trends and macro uncertainty. While the Hahnair agreement expands global reach, its immediate impact on the key catalyst, stronger booking volumes through diverse channels, remains limited, and the biggest risk continues to be unpredictable demand in leisure travel rather than this development.

Of all the recent announcements, the reaffirmation of full-year EBIT guidance remains the most relevant. By sticking to its US$600 million to US$800 million target, Southwest signals stability in earnings expectations despite shifting travel patterns, which ties directly to investor focus on revenue consistency as major catalysts unfold.

However, investors should be aware that despite these updates, uncertainty around future demand, especially for leisure travel, still looms large...

Read the full narrative on Southwest Airlines (it's free!)

Southwest Airlines' outlook anticipates $32.6 billion in revenue and $1.9 billion in earnings by 2028. This scenario is based on 5.9% annual revenue growth and an increase in earnings of $1.5 billion from the current $392 million.

Uncover how Southwest Airlines' forecasts yield a $33.76 fair value, a 11% upside to its current price.

Exploring Other Perspectives

Seven Simply Wall St Community fair value estimates for Southwest Airlines range widely, from US$7.74 to US$45.91. While some see opportunity, ongoing macroeconomic uncertainty casts a shadow over the company’s near-term earnings and pricing power.

Explore 7 other fair value estimates on Southwest Airlines - why the stock might be worth as much as 51% more than the current price!

Build Your Own Southwest Airlines Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Southwest Airlines research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Southwest Airlines research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Southwest Airlines' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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