Filing Flows › Southwest Airlines (LUV) › Takeover & LBO
Is Southwest Airlines (LUV) a takeover target?
A leveraged buyout at today's price plus 30% ($57.67 a share) would return a loss of about 23% a year to a private-equity buyer over 5 years; the most a buyer could pay for a 20% return is $26.16 a share (−41% against today's $44.36). Historically 2.3% of companies with its figures were bought within a year (0.47× the average).
The buyout, step by step
| Entry | Amount | How |
|---|---|---|
| Offer price a share | $57.67 | today's $44.36 plus 30% |
| × shares | 494.0 million | |
| = Equity value | $28.5B | |
| + Debt refinanced | $4.9B | |
| − Cash | $3.6B | |
| = Enterprise value | $29.8B | 10.1× EBITDA of $3.0B |
| Fees | $596M | 2% of the price |
| New debt | $16.2B | 5.5× EBITDA at 7.65% a year; the limit that binds: 5.5× EBITDA |
| Buyer's own money | $14.1B | 47% of the cost |
5 years under the buyer
| Year | Revenue | EBITDA | Interest | Free cash flow | Debt left |
|---|---|---|---|---|---|
| Year 1 | $34.1B | $3.2B | $1.2B | −$1.8B | $18.1B |
| Year 2 | $36.4B | $3.4B | $1.4B | −$1.9B | $20.0B |
| Year 3 | $38.4B | $3.6B | $1.5B | −$2.1B | $22.1B |
| Year 4 | $40.0B | $3.7B | $1.7B | −$2.2B | $24.3B |
| Year 5 | $41.2B | $3.9B | $1.9B | −$2.3B | $26.6B |
The exit and the buyer's return
| Exit | Amount | |
|---|---|---|
| Exit multiple | 7.9× EBITDA | today's trading multiple, before any premium |
| Enterprise value at exit | $30.3B | |
| − Debt left | $26.6B | |
| = Buyer's equity | $3.7B | |
| Money multiple | 0.26× | on $14.1B put in |
| Buyer's yearly return (IRR) | −23.3% |
Price against return
What the buyer makes at other premiums over today's $44.36; the IRR reaches 20% at $26.16 a share.
| Premium | Price a share | Buyer's IRR |
|---|---|---|
| 10% | $48.80 | −17.3% |
| 20% | $53.23 | −20.7% |
| 30% | $57.67 | −23.3% |
| 40% | $62.10 | −25.6% |
| 50% | $66.54 | −27.4% |
The figures used
| Figure | Amount | |
|---|---|---|
| Revenue, last 12 months | $31.5B | |
| EBITDA, last 12 months | $3.0B | 9.4% of revenue |
| Depreciation and amortization | $1.6B | |
| Capital spending | $3.2B | |
| Debt | $4.9B | |
| Cash | $3.6B | |
| Share price | $44.36 | on Nov 5, 2026 |
Fixed rules, the same as the interactive view's starting point: the shares are bought at today's price plus 30%, the company's debt is refinanced and fees take 2%. New debt is the least of 5.5× EBITDA, 65% of the price and the amount whose interest EBITDA covers 2 times, at 7.65% a year (SOFR 3.89% plus the high-yield B spread 3.26% plus 0.5%, rates of Oct 15, 2026). Revenue grows 8.0% in the first year — the company's own rate, held between −3% and +8% — fading to 3% by year 5; the EBITDA margin, depreciation and capital spending stay at today's share of revenue; working capital takes 10% of each year's added revenue; tax is 22% of profit after interest. Every dollar of free cash flow repays debt. After 5 years the buyer sells at today's multiple of EBITDA.
What a takeover could cost
Takeovers in its sector paid a median premium of 40% over the share price before the deal (the middle half 14.7% to 60.2%), according to the 20 merger proxies and tender-offer responses on EDGAR that state a premium. At the median, Southwest Airlines would cost about $62.10 a share, $30.7B for all its shares.
| Premium | % | Price a share | All shares |
|---|---|---|---|
| Low end (a quarter of deals paid less) | 14.7% | $50.88 | $25.1B |
| Median | 40% | $62.10 | $30.7B |
| High end (a quarter paid more) | 60.2% | $71.06 | $35.1B |
The odds, from history
Historically 2.3% of companies with its figures were bought within a year (0.47× the average). Its figures put it in decile 1 of 10 (10 = the most likely to be bought). The odds come from a model of every merger proxy, tender-offer response and going-private statement filed on EDGAR since 2011, set against each company's size, margins, debt, cash flow and growth the year before.
Southwest Airlines' latest quarter
Southwest Airlines, Q3 2026: revenue $8.4B (+21% year over year), operating margin 4.5%, net earnings $270M, operating cash flow $513M. The chart follows the revenue to costs, profit and cash.
Questions
Is Southwest Airlines being acquired?
No headline, 8-K or 13D about a sale is on file in the last year.
Could private equity buy Southwest Airlines?
A leveraged buyout at today's price plus 30% ($57.67 a share) would return a loss of about 23% a year to a private-equity buyer over 5 years; the most a buyer could pay for a 20% return is $26.16 a share (−41% against today's $44.36).
What would a takeover of Southwest Airlines cost?
Takeovers in its sector paid a median premium of 40% over the share price before the deal (the middle half 14.7% to 60.2%), according to the 20 merger proxies and tender-offer responses on EDGAR that state a premium. At the median, Southwest Airlines would cost about $62.10 a share, $30.7B for all its shares.
Updated Nov 8, 2026. Read automatically from SEC filings and public data; errors are possible. Not investment advice.