Southwest Airlines (NYSE:LUV) Announces FY 2026 Earnings Guidance

Key Points

• Southwest lowered its FY 2026 EPS guidance to $2.60–$2.85, below the $2.85 consensus estimate; Q4 EPS is expected at $0.55–$0.80.
• The airline reported a strong third quarter, with revenue rising 21.2% year over year to a record $8.42 billion and EPS of $0.66, beating analysts’ $0.57 estimate.
• Elevated fuel costs remain a key risk to margins and profitability, while analyst sentiment remains cautious: Southwest has an overall “Hold” rating and an average price target of $47.41.

Southwest Airlines (NYSE:LUV - Get Free Report) updated its FY 2026 earnings guidance on Friday. The company provided EPS guidance of 2.600-2.850 for the period, compared to the consensus EPS estimate of 2.850. Southwest Airlines also updated its Q4 2026 guidance to 0.550-0.800 EPS.

Southwest Airlines Stock Performance

Shares of Southwest Airlines stock traded down $0.93 on Friday, reaching $41.10. 1,290,043 shares of the company traded hands, compared to its average volume of 7,413,531. Southwest Airlines has a 52 week low of $29.26 and a 52 week high of $55.11. The company has a 50 day moving average of $40.62 and a 200 day moving average of $42.89. The firm has a market capitalization of $20.11 billion, a PE ratio of 25.21, a PEG ratio of 1.06 and a beta of 1.16. The company has a debt-to-equity ratio of 0.54, a current ratio of 0.49 and a quick ratio of 0.42.

Southwest Airlines (NYSE:LUV - Get Free Report) last posted its quarterly earnings results on Wednesday, October 21st. The airline reported $0.66 EPS for the quarter, topping analysts' consensus estimates of $0.57 by $0.09. The company had revenue of $8.42 billion for the quarter, compared to analysts' expectations of $8.25 billion. Southwest Airlines had a net margin of 3.34% and a return on equity of 18.07%. Southwest Airlines's revenue was up 21.2% on a year-over-year basis. During the same quarter in the previous year, the firm posted $0.11 EPS. Equities analysts forecast that Southwest Airlines will post 2.91 earnings per share for the current year.

Southwest Airlines Dividend Announcement

The company also recently announced a quarterly dividend, which was paid on Thursday, September 24th. Shareholders of record on Thursday, September 3rd were given a $0.18 dividend. This represents a $0.72 dividend on an annualized basis and a yield of 1.8%. The ex-dividend date of this dividend was Thursday, September 3rd. Southwest Airlines's dividend payout ratio (DPR) is currently 44.17%.

Analyst Upgrades and Downgrades

A number of analysts have issued reports on the company. Jefferies Financial Group raised their target price on Southwest Airlines from $44.00 to $50.00 and gave the stock a "hold" rating in a research report on Wednesday, July 1st. Evercore increased their price target on Southwest Airlines from $44.00 to $52.00 in a research note on Thursday, June 25th. Morgan Stanley lifted their price objective on Southwest Airlines from $60.00 to $65.00 and gave the stock an "overweight" rating in a report on Monday, July 6th. Susquehanna lowered their price objective on Southwest Airlines from $50.00 to $45.00 and set a "neutral" rating on the stock in a research note on Wednesday, October 7th. Finally, Raymond James Financial cut their target price on shares of Southwest Airlines from $60.00 to $54.00 and set an "outperform" rating for the company in a research report on Monday, August 24th. Nine analysts have rated the stock with a Buy rating, nine have assigned a Hold rating and four have issued a Sell rating to the stock. Based on data from MarketBeat.com, the stock currently has an average rating of "Hold" and an average price target of $47.41.

Southwest Airlines News Summary

Here are the key news stories impacting Southwest Airlines this week:

• Positive Sentiment: Record revenue and earnings beat: Third-quarter operating revenue rose 21.2% year over year to a record $8.42 billion, exceeding the roughly $8.25 billion consensus estimate. Adjusted EPS was $0.66 versus expectations of approximately $0.57, compared with $0.11 a year earlier. LUV Q3 Earnings Beat on Record Revenues and Higher Fares
• Positive Sentiment: Pricing power improved margins: Passenger revenue increased 22.8%, revenue per available seat mile climbed 21.6%, and the operating margin expanded to 4.5% from 0.5% a year ago. Higher fares, fees and resilient travel demand helped Southwest absorb an $821 million increase in fuel expense. Southwest Airlines posts record revenue as fuel costs surge
• Positive Sentiment: Near-term demand remains constructive: Management expects fourth-quarter adjusted EPS of $0.55 to $0.80 and projected fourth-quarter unit revenue growth of roughly 19% to 21%, supporting the view that demand and pricing momentum remain strong.
• Neutral Sentiment: Analyst caution: Wells Fargo issued a Hold rating, while Susquehanna reduced its price target to $43 from $45, suggesting limited near-term upside despite the earnings beat. Susquehanna Adjusts Price Target on Southwest Airlines
• Negative Sentiment: Fuel costs lowered the full-year outlook: Southwest cut its 2026 adjusted EPS forecast to $2.60–$2.85 as jet-fuel prices remain elevated. Management said it is planning for higher fuel costs to persist into 2027, creating an ongoing risk to margins and profitability. Southwest Airlines cuts 2026 profit forecast as fuel costs spike

About Southwest Airlines

Southwest Airlines Co is a major U.S. passenger airline headquartered in Dallas, Texas. The company provides scheduled air transportation for leisure and business travelers, with service connecting cities throughout the United States and selected destinations in Mexico, the Caribbean, and Central America.

Southwest is known for its predominantly domestic network and point-to-point operating model. In addition to passenger flights, the company offers ancillary services and air cargo transportation.

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