Southwest Airlines announced a reduction in its 2026 adjusted earnings outlook, joining two other major U.S. carriers that have revised forecasts this month because of rising fuel expenses. The airline now expects adjusted earnings of $2.60 to $2.85 per share for the year, a downgrade from the July range of $3.25 to $4.25 per share.
Q3 Performance Beats Expectations
Despite the forecast cut, the carrier delivered a third‑quarter earnings report that topped Wall Street consensus estimates compiled by LSEG. Adjusted earnings came in at 66 cents per share, surpassing the 58‑cent expectation. Revenue for the quarter reached $8.42 billion on an adjusted basis, edging above the projected $8.25 billion. Net income climbed sharply to $270 million, or 55 cents a share, compared with $54 million, or 10 cents a share, recorded a year earlier.
Changing Business Model and Future Outlook
Looking ahead, Southwest forecast adjusted earnings of 55 to 80 cents per share for the fourth quarter. The airline also projected unit revenue—a measure of airfare—could be as much as 21 % higher than a year earlier, and it expects capacity to expand by up to 4 % year over year. Average passenger fare in the third quarter was $231.69, reflecting an almost 27 % increase from the same period in 2025, though the figure excludes ancillary fees. Revenue passenger traffic slipped 3.2 % to 33.47 million travelers.
These results come as Southwest continues to reshape its long‑standing business model. Over recent years the carrier has eliminated its traditional policies of offering two free checked bags per passenger and open seating. In their place, the airline now charges for many seat assignments and has introduced a baggage fee, aligning its practices more closely with those of larger competitors.
Industry‑Wide Profit Forecast Adjustments
Southwest’s forecast revision mirrors moves by Delta Air Lines and United Airlines, both of which also lowered profit outlooks for the remainder of the year after reporting third‑quarter earnings that missed both revenue and earnings expectations.
CEO Bob Jordan emphasized that, even with the higher fares driven by fuel cost pressures, travelers continue to book flights. “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 the earnings release.
While the airline acknowledges the impact of fuel price volatility on its profitability, the combination of solid quarterly earnings, rising average fares and a belief in resilient demand suggests Southwest aims to navigate the cost environment without compromising its growth trajectory.
Mitchell Landsberg is a Senior Technology Correspondent at News Raise. He covers consumer electronics, artificial intelligence, software developments, and digital privacy trends.
