Southwest Airlines became the third major U.S. airline this month to cut its 2026 profit forecast due to higher fuel prices, but CEO Bob Jordan said travelers continue to book despite higher fares.
The carrier expects to earn between $2.60 and $2.85 a share on an adjusted basis this year, down from its forecast in July of between $3.25 to as much as $4.25 a share.
Here’s what Southwest reported for third quarter compared with Wall Street expectations, according to consensus estimates from LSEG:
- Earnings per share: 66 cents adjusted vs. 58 cents expected
- Revenue: $8.42 billion adjusted vs. $8.25 billion expected
Southwest forecast per-share adjusted earnings of between 55 cents and 80 cents in the fourth quarter and unit revenue, a gauge of airfare, up as much as 21% from a year earlier. It said it expects to grow capacity by up to 4% year over year.
“Demand remained strong as we lapped last year’s bag fee and other commercial initiatives, reinforcing our belief that the earnings power we’ve built is durable, even with significantly higher fuel costs,” Jordan said in an earnings release.
The airline said its average passenger fare was $231.69 in the third quarter, up almost 27% from the same quarter of 2025. A spokesman said that number does not include add-on fees. The number of revenue passengers carried fell 3.2% to 33.47 million people.
Under pressure to grow revenue, Southwest has been remaking its longtime business model over the past several years, scrapping its old policies like two free checked bags per passenger and open seating. In its place, Southwest has started charging for many seat assignments and added a bag fee, similar to major competitors.
For the third quarter, Southwest posted net income of $270 million, or 55 cents a share, up from $54 million or 10 cents a share a year earlier. Revenue rose more than 21% to $8.42 billion.
Adjusting for one-time items, Southwest reported 66 cents a share.
Delta Air Lines and United Airlines also cut their profit outlooks for the rest of the year when they reported third-quarter earnings. Both of those airlines reported top- and bottom-line misses for the third quarter.
