Southwest Airlines Boeing 737 airplanes at Hobby Airport during an afternoon rainstorm in Houston, Texas, May 27, 2026.
Kevin Carter | Getty Images News | Getty Images
Southwest Airlines reported a more than 9% increase in second-quarter profit from last year as higher fares are increasingly helping the airline cover its fuel tab, but its summer outlook fell below Wall Street forecasts.
The airline forecast third-quarter adjusted earnings of between 50 cents and 75 cents, below the 82 cents analysts expected, even though it projected an increase in sales between 17.5% and 19.5% from a year earlier. The Dallas airline said it plans to contract capacity 1% at most or keep it flat compared with the third quarter of 2025.
Southwest expects adjusted earnings per share of $3.25 to $4.25 for the full year. In January, it forecast adjusted full-year 2026 earnings of at least $4 a share.
While fuel prices have eased from a record spike sparked by the Iran war, costs have been volatile and airlines this month said they’re largely holding onto fare gains this year. Southwest’s average one-way fares rose almost 21% to $225.61 from $186.65 a year earlier.
“The demand environment just remains really strong, and that includes domestic,” Chief Financial Officer Tom Doxey told CNBC on Wednesday.
Southwest in the past two years has torn up its decades-old business model to increase revenue. It ended open-seating in January, launched basic economy fares and even stopped its long-standing policy of allowing customers to check two bags for free.
Doxey said recent improvements to aircraft and amenities are helping to attract more business travelers.
In the second quarter, Southwest’s revenue increased 16.4% to $8.4 billion. But Southwest’s costs also spiked, with a 67% increase in its fuel bill to $2.22 billion in the second quarter from a year before.
Net income rose 9.4% to $233 million, or 47 cents a share, compared with $213 million or 39 cents a share a year earlier.
Here’s what Southwest reported for second quarter compared with Wall Street expectations, according to consensus estimates from LSEG:
- Earnings per share: 94 cents adjusted vs. 51 cents expected
- Revenue: $8.72 billion adjusted vs. $8.58 billion expected
Excluding one-time items, Southwest reported an adjusted 94 cents per share, including an adjustment for customers that redeemed flight credits in higher numbers than projected. Southwest changed its old policy and put expiration dates on flight credits, starting with many ticket classes sold starting in mid-2025. The company’s revenue figure was also adjusted for that reason.
Clarification: This story has been updated to reflect that adjusted revenue was comparable with analyst expectations.
