Southwest Airlines has lowered its profit forecast for 2026 as rising jet fuel prices put pressure on earnings, offsetting gains from higher ticket fares and changes to its business strategy.
The US-based carrier now expects adjusted earnings of $2.60 to $2.85 per share for the full year, down from its previous estimate of $3.25 to $4.25 per share. The revised outlook reflects the growing cost of fuel, which has become a major challenge for airlines across the industry.
Southwest’s fuel expenses increased by $821 million compared with the same period last year in the third quarter of 2026. The airline paid an average of $3.92 per gallon for fuel during the quarter, above its earlier expectations. It also expects fuel prices to rise further in the final three months of the year.
Despite the higher costs, Southwest recorded strong financial results for the third quarter. Operating revenue reached a record $8.4 billion, an increase of 21.2% from the previous year. Average passenger fares rose nearly 27%, helping the airline generate more revenue from ticket sales.
The company also posted adjusted earnings of 66 cents per share for the quarter, beating analysts’ expectations of 58 cents.
Southwest has been changing its business model to attract more passengers willing to pay higher fares. The airline, traditionally known for free checked bags and open seating, has introduced new fees and services as part of its efforts to improve profitability.
However, higher ticket prices have not been enough to fully offset the increase in fuel expenses. The airline expects adjusted earnings of 55 to 80 cents per share in the fourth quarter.
Southwest plans to increase capacity by 3% to 4% in the final quarter of 2026. The company will continue to focus on managing costs and improving revenue as it faces uncertainty over fuel prices.
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