Southwest Airlines became the third US airline this month to cut its 2026 profit forecast due to higher fuel prices, but CEO Bob Jordan said travelers are continuing to book despite higher fares.
The carrier expects to earn between $2.60 and $2.85 per share on an adjusted basis this year, down from forecasts in July of between $3.25 and $4.25 per share.
Here’s what Southwest reported for the third quarter compared to Wall Street expectations, according to consensus estimates from LSEG:
- Earnings per share: 66 cents adjusted vs 58 cents expected
- result: $8.42 billion adjusted vs $8.25 billion expected
Southwest forecast per-share earnings adjusted between 55 cents and 80 cents in the fourth quarter and unit revenue, a measure of airfare, up as much as 21% from a year earlier. They say they plan to increase their capacity by 4% annually.
“Demand remains strong as we roll out last year’s bag fees and other commercial initiatives, reinforcing our belief that the earnings power we’ve built is durable, even with higher fuel costs,” Jordan said in an earnings release.
The airline said average passenger fares were $231.69 in the third quarter, up nearly 27% from the same quarter in 2025. The spokeswoman said the number does not include additional fees. The number of passengers carried decreased by 3.2% to 33.47 million people.
Under pressure to increase revenue, Southwest has overhauled its long-standing business model over the past several years, ditching old policies like two free checked bags per passenger and open seats. In its place, Southwest has started charging more seat assignments and adding bag fees, similar to its main competitors.
For the third quarter, Southwest reported net income of $270 million, or 55 cents per share, from $54 million or 10 cents a year earlier. Revenue rose more than 21% to $8.42 billion.
Adjusted for one-time items, Southwest reported 66 cents a share.
Delta Air Lines and United Airlines also cut profit outlooks for the rest of the year when they report third quarter earnings. Both airlines reported top and bottom misses for the third quarter.