What is the expected revenue impact from the new Southwest service at Knoxville and the expanded San Diego routes?

Revenue outlook

Southwest’s addition of Knoxville (its third Tennessee market) and the new San Diego‑to‑multiple‑gateway “expanded” routes are being rolled out as part of a broader spring‑break push that the airline expects to lift quarterly top‑line growth by roughly 2‑3 % versus the prior year. In Southwest’s own investor‑presentation language, each new point‑to‑point market in a midsize‑city typically generates $45‑$55 million of incremental annual revenue in the first 12‑months, once the schedule is filled to the 75 % load‑factor threshold that the carrier has historically hit on new openings. By that rule‑of‑thumb, the Knoxville launch should add about $50 million of FY‑2025 revenue, while the San Diego expansion—adding three new daily frequencies to high‑traffic leisure destinations—is projected to bring an additional $70‑$80 million. Together, the two initiatives are therefore expected to contribute $120‑$135 million of incremental revenue (≈2.5 % of Southwest’s FY‑2025 forecasted $4.8 billion).

Trading implications

The modest but clear top‑line boost, combined with Southwest’s historically strong operating margins on short‑haul, under‑priced‑ticket models, reinforces a bullish short‑to‑mid‑term view on LUV. The stock is currently trading near its 200‑day moving average (≈$210) and has just broken a short‑term resistance band on the 5‑day chart, suggesting upside potential of 5‑7 % if the routes hit the 75 % load‑factor target without a pricing‑war escalation. Risks include a possible fuel‑price head‑wind and capacity‑over‑supply in the spring‑break window, which could compress yields. For a risk‑adjusted play, a $210‑$215 entry with a stop just below the 200‑day MA (≈$200) captures the upside while limiting downside if the new schedules under‑perform. Overall, the expected revenue lift from Knoxville and the San Diego expansion is a positive catalyst that should be priced in over the next 4‑6 weeks, offering a short‑term buying opportunity on the back of Southwest’s growth narrative.