Southwest Airlines has become the third major U.S. airline to cut its profit forecast for 2026, now expecting adjusted earnings per share between $2.60 and $2.85, down from a previous estimate of $3.25 to $4.25.
In the third quarter, the airline reported adjusted earnings of 66 cents per share, surpassing Wall Street's expectation of 58 cents, and revenue of $8.42 billion, which also exceeded the anticipated $8.25 billion. Looking ahead, Southwest forecasts fourth-quarter adjusted earnings per share between 55 cents and 80 cents, with unit revenue expected to rise by up to 21% year-over-year.
The average passenger fare increased to $231.69, a nearly 27% rise from the same quarter in 2025, although the number of revenue passengers decreased by 3.2% to 33.47 million. CEO Bob Jordan emphasized that demand remains strong, attributing this to the airline's recent commercial initiatives.
Southwest has been adapting its business model by introducing fees for seat assignments and baggage, moving away from its traditional policies. This shift comes amid a broader trend in the airline industry, as both Delta Air Lines and United Airlines have also reduced their profit outlooks following disappointing earnings reports