Southwest Airlines has revised its 2026 profit outlook downward due to rising fuel costs that are putting pressure on earnings. The airline now expects adjusted earnings per share to range between $2.60 and $2.85 for the year, a significant decline from its July forecast of $3.25 to $4.25 per share. Despite these challenges, CEO Bob Jordan emphasized that demand for travel remains robust, even as Southwest has increased fares to help offset soaring operational expenses.

For the third quarter, Southwest surpassed Wall Street expectations by reporting adjusted earnings of 66 cents per share against the anticipated 58 cents, and revenue of $8.42 billion compared to a forecast of $8.25 billion. The company projects per-share adjusted earnings between 55 and 80 cents for the fourth quarter, with unit revenue—reflecting airfare—expected to rise up to 21% year-over-year. Southwest also plans to increase its capacity by up to 4% in the upcoming quarter, signaling confidence in sustained travel demand.

Southwest has been adapting its business model by eliminating long-standing policies such as two free checked bags and open seating, introducing fees for bag checks and seat assignments similar to its competitors. This strategy has supported revenue growth despite a 3.2% decrease in revenue passengers carried to 33.47 million in the recent quarter. The average fare increased by nearly 27% from the same quarter last year, reaching $231.69, excluding additional fees.

Similar to Southwest, other major U.S. carriers like Delta Air Lines and United Airlines have also lowered their profit forecasts amid rising fuel expenses and posted disappointing third-quarter results. While Delta and United missed on both top- and bottom-line expectations, Southwest managed to exceed them, reporting net income of $270 million, or 55 cents per share, compared to $54 million, or 10 cents per share, last year. The airline remains optimistic that strong consumer demand will persist through both holiday and off-peak travel periods.