A downbeat outlook tarnished an otherwise strong quarter for Southwest, which topped profit estimates on robust holiday travel.

Southwest Airlines exceeded earnings expectations for Q4 2024, but ongoing cost pressures remain a concern. The quarter was highlighted by record revenue, though persistent cost challenges, particularly from labor and fuel,

U.S. budget carrier Southwest Airlines' fourth-quarter profit surpassed Wall Street estimates on Thursday, helped by robust travel demand and improved airfares.

Southwest's results echo sentiments laid out by Delta Air Lines, which reported quarterly results earlier in the month. Delta said demand accelerated throughout the fourth quarter, with a handful of its highest revenue days in history taking place in November and December. The company also expects travel demand to remain strong this year.

Southwest Airlines Co. warned that costs will climb faster than expected as it grapples with heavy labor expenses, undercutting gains from strong demand for leisure travel.

Southwest Airlines said Thursday that it faces higher costs in 2025 as inflation persists, but it managed to swing to a fourth-quarter profit due to a boost from lower fuel prices.