Southwest Airlines has become the third major U.S. carrier this month to reduce its 2026 profit projections, a direct consequence of escalating fuel prices eating into its profitability. Despite these financial pressures, CEO Bob Jordan emphasized that travel demand remains robust, with passengers continuing to book flights even with higher fares.
A Southwest Airlines Boeing 737 airplane departs from San Diego International Airport on May 27, 2026.
Kevin Carter | Getty Images News | Getty Images
The Dallas-based airline now anticipates adjusted earnings per share (EPS) for 2026 to be between $2.60 and $2.85, a notable decrease from its July forecast of $3.25 to $4.25 per share. This adjustment underscores the challenging operating environment for the airline industry.
For the third quarter, Southwest reported stronger-than-expected financial results:
- Earnings per share: 66 cents adjusted, surpassing the 58 cents anticipated by Wall Street.
- Revenue: $8.42 billion adjusted, exceeding expectations of $8.25 billion.
Looking ahead to the fourth quarter, Southwest projects adjusted earnings per share ranging from 55 cents to 80 cents. The airline also expects unit revenue, a key indicator of airfare, to increase by as much as 21% compared to the previous year, with capacity growth estimated at up to 4% year-over-year.
Jordan highlighted the resilience of demand, stating in an earnings release, "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."
In the third quarter, the average passenger fare at Southwest climbed to $231.69, marking an almost 27% increase from the same period in 2025. While average fares rose, the number of revenue passengers carried saw a slight dip of 3.2% to 33.47 million people.
Under ongoing pressure to boost revenue, Southwest has been strategically evolving its long-standing business model. This includes moving away from previous policies like offering two free checked bags per passenger and open seating. Instead, the airline has implemented charges for many seat assignments and introduced a bag fee, aligning its practices more closely with its primary competitors.
Overall, Southwest posted a net income of $270 million, or 55 cents per share, for the third quarter, a substantial improvement from $54 million, or 10 cents per share, reported a year earlier. Total revenue for the quarter also saw significant growth, rising over 21% to $8.42 billion.
Southwest's revised outlook comes after fellow major U.S. carriers Delta Air Lines and United Airlines also reduced their profit forecasts for the remainder of the year following their third-quarter earnings reports. Both Delta and United also missed top- and bottom-line expectations for the quarter, indicating a sector-wide challenge driven largely by rising fuel expenses.
