Southwest Airlines cut its 2026 adjusted profit forecast to between $2.60 and $2.85 a share as higher fuel prices weigh on results. The carrier still beat third-quarter estimates, and its CEO said travelers continue to book despite higher fares.
Southwest Airlines cut its 2026 profit forecast to between $2.60 and $2.85 a share on an adjusted basis, down from between $3.25 and $4.25 in July. It became the third major U.S. airline this month to lower its outlook because of higher fuel prices.
However, the third quarter came in ahead of Wall Street estimates. Southwest reported adjusted earnings per share of 66 cents against 58 cents expected, according to LSEG consensus. Adjusted revenue reached $8.42 billion, compared with $8.25 billion expected.
Fares climb while passenger count falls
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 figure does not include add-on fees. Meanwhile, the number of revenue passengers carried fell 3.2% to 33.47 million.
CEO Bob Jordan pointed to demand. According to the earnings release: "Demand remained strong as we lapped last year’s bag fee and other commercial initiatives".
Southwest posted net income of $270 million, or 55 cents a share, up from $54 million, or 10 cents a share, a year earlier.
Fuel costs shape the outlook
The fourth-quarter guide fell short. Southwest expects profit of 55 cents to 80 cents per share, below estimates of an 82 cents profit, according to Reuters. The airline also expects fuel to average $4.55 per gallon in the fourth quarter, based on the forward curve as of October 15.
Reuters reported that jet fuel prices have scaled their spring highs as the Middle East conflict shows no sign of abating. As a result, airlines have scaled back year-end and 2027 capacity growth.
Delta Air Lines and United Airlines also cut their profit outlooks when they reported third-quarter earnings. Southwest shares were up 1% in extended trading.
Sources: CNBC, Investing.com
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