What happened

Shares of Southwest Airlines (NYSE:LUV) climbed 14.3% last month, according to data provided by S&P Global Market Intelligence, after the airline was able to deliver better-than-expected earnings despite the impact of a fatal engine accident. 

So what 

In April, Southwest suffered the first accident-related fatality in the company's history when passenger Jennifer Riordan died in an incident related to an engine malfunction. In addition to the tragic loss of human life, Southwest estimates that the accident reduced passenger revenue by about $100 million in the second quarter. 

Despite these losses, Southwest was able to generate a slight increase in second-quarter revenue, to $5.74 billion. Moreover, the airline's adjusted earnings per share rose 2.4%, to $1.26, which exceeded Wall Street's estimates of $1.22. 

A Southwest Airlines airplane

Southwest Airline's profits rose more than expected in the second quarter. Image source: Getty Images.

Now what

Southwest expects the negative effects of the accident will subside in the third quarter. In addition, recent capacity cuts may help to preserve the major airlines' pricing power and margins, all of which should benefit Southwest's profitability in the coming quarters.  

Interestingly, rumors regarding a potential acquisition by Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) have also intensified in recent weeks. Such a deal could make sense, considering Berkshire CEO Warren Buffett's newfound affinity for airline stocks. And if Berkshire was to make an offer for Southwest, it would likely need to be at a substantial premium to today's price in order to gain shareholder approval.

Speculating on a buyout can be risky, as a deal may not materialize. Yet regardless of whether Berkshire -- or anyone else, for that matter -- makes a bid for Southwest, the airline's stock appears poised to deliver strong returns for investors in the years ahead.