Earnings Preview: Southwest Airlines

Southwest Airlines (LUV) is expected to report Q2 earnings before market open Thursday, July 24, with a conference call scheduled for 12:00 pm ET.

Guidance

Analysts are looking for EPS of 12c on revenue of $2.86B. The consensus range for EPS is 3c to 18c, and $2.77B to $2.95B for revenue, according to First Call.

Analyst Views

At the Merrill Lynch Global Transportation Conference, Southwest CEO Gary C. Kelly made comments regarding the company's plans for the future. Kelly said the company is "very well prepared to weather storm" and Southwest will be "pushing fares up this quarter gently." He also noted the company "has initiatives underway to deal with fuel costs," and the company "may grow fleet zero next year." Even though Mr. Kelly stated he was "not making bold predictions to where oil will go," he noted the company was "prepared for $4 jet fuel." Soleil Securities downgraded the airline sector to Neutral from Outperform in May, based on on liquidity concerns stemming from the rise in oil prices. The firm however maintained its Buy rating on Southwest.