Southwest posts record third-quarter revenue, up 21%, and wider margins despite fuel costs

Southwest Airlines set a third-quarter revenue record and widened its profit margin, despite an $821 million increase in fuel costs.

Operating revenue rose 21.2% to $8.4 billion, according to the earnings release Southwest filed with an 8-K on Wednesday. Net income was $270 million, or 55 cents a share, and adjusted EPS, a non-GAAP measure, was 66 cents.

Revenue per available seat mile, a key industry gauge, rose 21.6% to an all-time record on capacity that was down 0.4%. Operating margin reached 4.5%, up 4.0 points from a year earlier, and adjusted operating margin rose 4.8 points to 5.4%.

"Demand remained strong as we lapped last year's bag fee and other commercial initiatives, reinforcing our belief that the earnings power we've built is durable, even with significantly higher fuel costs," President and CEO Bob Jordan said in the release.

Outlook

Southwest expects fourth-quarter adjusted EPS of 55 cents to 80 cents, with unit revenue up 19% to 21% and capacity up 3% to 4%. For the full year, it forecast adjusted EPS of $2.60 to $2.85. The guidance is based on the forward fuel curve as of Oct. 15, the company said.

What's new for travelers

The airline said it plans to open its first airport lounges, the Southwest Icon Lounge network, with the first guests expected in 2027. It also announced changes to its Rapid Rewards loyalty program, including a new Platinum tier, and said Starlink Wi-Fi should be installed fleetwide by fall 2027.

Southwest will host a Capital Markets Day in New York on March 2, 2027, where it plans to lay out a multi-year financial framework.

By the numbers

• Operating revenue: $8.4 billion, up 21.2%
• Net income: $270 million, or $0.55 a share
• Adjusted EPS: $0.66
• Unit revenue (RASM): up 21.6%
• 2026 adjusted EPS guide: $2.60 to $2.85

Sources

1. Southwest Airlines Co., Form 8-K (Item 2.02) with Exhibit 99.1 earnings release dated Oct. 21, 2026, accession 0000092380-26-000104

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