Key Points
- Southwest cut its 2026 adjusted EPS guidance to $2.60-$2.85 from $4, citing fourth-quarter jet fuel of up to $4.55 a gallon.
- Fuel pressure is sector-wide: United expects $4.80 a gallon in the fourth quarter and Alaska $4.65 to $4.85.
- Revenue is still growing — third-quarter operating revenue rose 21.2% to $8.4 billion with $270 million in net income — as Southwest adds lounges, overhauls loyalty, and weighs long-haul flying.
Summary
Southwest Airlines cut its 2026 adjusted earnings per share outlook to between $2.60 and $2.85, down from a previous forecast of $4, as jet fuel costs climb. The carrier expects to pay as much as $4.55 a gallon in the fourth quarter, after paying $3.92 a gallon in the third quarter — above its own estimates of $3.70 to $3.75. The pressure is industry-wide: United Airlines expects to pay $4.80 a gallon in the fourth quarter and Alaska Airlines is guiding to $4.65 to $4.85. Southwest’s operating results are still growing, with third-quarter operating revenue of $8.4 billion, up 21.2%, and net income of $270 million. CFO Tom Doxey said at a September investor conference that the carrier had more room to raise airfares to offset fuel costs. Southwest is continuing its push upmarket, with lounges planned in four U.S. cities next year, a loyalty program overhaul, and CEO Bob Jordan floating eight to 12 long-haul international flights depending on customer demand. Reuters reported the carrier is considering a Boeing 787 order for that long-haul strategy. Jordan said Southwest will host a capital markets day in New York in March 2027.
Source: skift.com
