Southwest Airlines Beat Q3 Estimates, but Fuel Costs Cloud Q4
As seen on the 24/7 Wall St. homepage on October 21, 2026.
Southwest beat estimates on both lines with record unit revenue, as the average passenger fare climbed to $231.69. The catch is fuel: management assumes roughly $4.55 per gallon in the fourth quarter, which is why the guide tops out at $0.80.
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Southwest Airlines posted third-quarter 2026 adjusted earnings per share of $0.66, beating expectations, with revenue also ahead of estimates on what the company called all-time record unit revenue.
Pricing power drove both beats: the average passenger fare climbed to $231.69 from a year earlier, while RASM rose and managed business revenue set a third-quarter record.
Fuel cost is the story heading into the fourth quarter, with the company assuming roughly $4.55 per gallon based on the October 15 forward curve. That step up caps the Q4 adjusted EPS guidance range and frames full-year 2026 guidance.
CEO Bob Jordan credited strong consumer response to the carrier's enhanced product offering, noting that demand held up even as the company lapped last year's bag fee introduction and other commercial initiatives. He described the earnings power Southwest has built as durable, even in the face of significantly higher fuel costs.
Beyond the quarter, Southwest expects fleet-wide Starlink WiFi installation to be complete in fall 2027, plans its first airport lounges that same year, and has become the first U.S. airline to make flight shopping available through ChatGPT. Management will lay out a multi-year financial framework at a Capital Markets Day in New York City on March 2, 2027.
Mentioned: LUV