Southwest Airlines (LUV) Posts Record Revenue and Beats Q3 Earnings

Southwest Airlines Co. reported third-quarter adjusted earnings of $0.66 per share, surpassing consensus expectations of 58 cents compiled by LSEG. Revenue reached a third-quarter record of $8.42 billion, outperforming expectations of $8.25 billion and rising more than 21% from $6,949 million a year earlier. Following the earnings release, the company's shares gained 5.4% to trade at US$42.02.

Net income excluding extra items rose to $270 million, or US$0.55 per basic share, compared to $54 million, or US$0.10 per basic share, in the prior-year period. Revenue per available seat mile climbed 21.6% year over year, surpassing company guidance. The average passenger fare increased almost 27% to $231.69, excluding add-on fees, while passenger load factor moved slightly lower to 79.3% from 79.8%.

Chief Executive Bob Jordan stated that consumer travel demand remains strong across all regions and products, extending through both holiday and non-holiday periods. The carrier has revised its business model by adding bag fees and charging for select seat assignments, moving away from historic practices like open seating and two complimentary checked bags.

Despite commercial momentum, Southwest lowered its full-year 2026 adjusted earnings guidance to between $2.60 and $2.85 per share, down from a July projection of $3.25 to $4.25 per share. The downward revision reflects an $820 million year-over-year headwind from elevated fuel prices. Third-quarter fuel costs came in $109 million, or $0.14 per share, above prior guidance assumptions.

For the fourth quarter, Southwest anticipates adjusted earnings between $0.55 and $0.80 per share, assuming an average fuel price of roughly $4.55 per gallon. Fourth-quarter revenue per available seat mile is projected to rise 19% to 21% year over year alongside capacity growth of up to 4%. The airline closed the third quarter with $5.6 billion in liquidity and a gross leverage ratio of 1.9 times.