Southwest Airlines (LUV) 2Q 2026 earnings

Southwest Airlines reported a more than 9% increase in second-quarter profit from last year as higher fares increasingly helped the airline cover its fuel bill, but its summer outlook fell below Wall Street forecasts.

The airline expects adjusted earnings in the third quarter to be between 50 cents and 75 cents, below the 82 cents analysts expected, even though it forecast a 17.5% to 19.5% increase in sales from a year earlier. The Dallas airline said it plans to shrink capacity by no more than 1% or keep it steady compared to the third quarter of 2025.

Southwest expects full-year adjusted earnings per share of $3.25 and $4.25. In January, full-year 2026 adjusted earnings were projected to be at least $4 per share.

While fuel prices have eased after a record rise sparked by the Iran war, costs remain volatile and airlines said this month they were largely maintaining this year’s fare increases. Southwest’s average one-way fares rose almost 21% to $225.61, from $186.65 the previous year.

“The demand environment continues to be really strong, and that includes domestic,” CFO Tom Doxey told CNBC on Wednesday.

Southwest has disrupted its decades-old business model over the past two years to increase revenue. In January, it ended open seating, introduced basic economy fares and even halted its long-standing policy of allowing customers to check two bags for free.

Doxey said recent advances in aircraft and amenities are helping attract more business travelers.

In the second quarter, Southwest’s revenue rose 16.4% to $8.4 billion. But Southwest’s costs also rose rapidly, with its fuel bill rising 67% in the second quarter from a year earlier to $2.22 billion.

Net income rose 9.4% to $233 million, or 47 cents per share, compared with $213 million, or 39 cents per share, a year ago.

Here’s what Southwest reported for the second quarter compared to Wall Street expectations, based on LSEG’s consensus estimates:

• Earnings per share: 94 cents corrected. It was not immediately clear whether that was comparable to expectations of 51 cents.
• Revenues: 8.43 billion dollars, while the expectation was 8.58 billion dollars

Excluding one-time items, Southwest reported an adjusted profit of 94 cents per share, which included an adjustment for customers using a higher number of flight credits than anticipated. Southwest changed its old policy and put expiration dates on flight credits, with many ticket classes being sold starting in mid-2025.