TacticScaleWhat Southwest Airlines Does & How It Makes Money (LUV)
Updated October 2026 · reflects Southwest Airlines's latest reported financials
Major U.S. airline flying an all-Boeing 737 fleet. Southwest earns most of its money selling tickets on scheduled passenger flights.
How Southwest Airlines makes money
Southwest earns most of its money selling tickets on scheduled passenger flights. It also makes money from its Rapid Rewards loyalty program and from extra fees for services like checked bags, EarlyBird Check-In, upgraded boarding, in-flight purchases, and flying pets and unaccompanied minors.
What Southwest Airlines does
Southwest Airlines Co., founded in 1967 and based in Dallas, Texas, is a U.S. passenger airline. As of December 31, 2025, it flew an all-Boeing 737 fleet of 803 aircraft to 117 destinations in 42 states, the District of Columbia and Puerto Rico. It also flew to ten near-international countries, including Mexico, the Bahamas, Aruba, the Dominican Republic, Cuba and Turks and Caicos. Most of its revenue comes from ticket sales. It also earns money from the Rapid Rewards loyalty program and from paid extras such as baggage fees, EarlyBird Check-In, upgraded boarding and in-flight purchases. Other services include the SWABIZ online booking tool for businesses, an inflight entertainment platform with on-demand movies and live TV, and premium snacks and coffee on board.
Products & services
- Scheduled passenger air travel
- Rapid Rewards loyalty program
- SWABIZ business booking tool
- EarlyBird Check-In and upgraded boarding
- Inflight entertainment (movies, live TV, flight tracker)
- Pet and unaccompanied minor transportation
What is Southwest Airlines worth?
On an owner-earnings DCF, Southwest Airlines's most-likely value is about $45 versus a recent price near $42 (7% below fair value). But TacticScale only calls a stock undervalued when the price sits below its conservative no-growth floor (~$24) with a margin of safety — so the honest verdict here is “Fairly priced — no edge.” Fair value earns its keep only at the extremes, not in the wide middle.
Price sits in the normal range — fair value isn't actionable here; it earns its keep only when price drops below the no-growth floor, or runs to roughly double the optimistic case.
Analysis, not advice. Fair value is a margin-of-safety estimate from a deterministic owner-earnings DCF, not a price target or recommendation. See the full breakdown →
Related companies
SkyWest (SKYW) · United Airlines (UAL) · Delta Air Lines (DAL) · American Airlines (AAL) · JetBlue Airways (JBLU)