Southwest Airlines beats Q3 profit expectations on record passenger revenue
Overview
U.S. airline's Q3 operating revenue grew 21%, beating analyst expectations
Adjusted EPS for Q3 beat analyst expectations despite significant fuel headwind
Company announced new airport lounges and loyalty program enhancements
Outlook
Southwest Airlines sees Q4 2026 adjusted EPS of $0.55 to $0.80
Company expects Q4 2026 RASM up 19% to 21% year-over-year
Southwest Airlines forecasts 2026 adjusted EPS of $2.60 to $2.85
Result Drivers
STRONG PASSENGER YIELD - Co reported record passenger revenue and highest passenger yield in its history, citing strong demand and enhanced product offering
UNIT REVENUE GROWTH - Unit revenues rose 21.6% year-over-year to an all-time record, with managed business revenue also reaching a third quarter record
FUEL COST HEADWIND - Co said margin expansion occurred despite an $821 mln increase in fuel costs compared to a year ago
Company press release:
Key Details
Metric | Beat/Miss | Actual | Consensus Estimate |
Q3 Operating revenue | Beat | $8.42 bln | $8.25 bln (16 Analysts) |
Q3 Adjusted EPS | Beat | $0.66 | $0.58 (19 Analysts) |
Q3 Operating Expenses | $8.04 bln |
Analyst Coverage
The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 11 "strong buy" or "buy", 12 "hold" and 3 "sell" or "strong sell"
The average consensus recommendation for the airlines peer group is "buy."
Wall Street's median 12-month price target for Southwest Airlines Co is $50.00, about 26.1% above its October 20 closing price of $39.65
The stock recently traded at 10 times the next 12-month earnings vs. a P/E of 14 three months ago
Reuters Recommended Reads
Oct 21 - United Airlines sees elevated fuel costs through 2027, flags margin challenges
Oct 20 - LATAM says capacity growth tracking to lower end of guidance as fuel stays high
Oct 20 - Aerospace and military contractors raise 2026 profit forecasts
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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)