October 22, 2026 — Southwest Airlines posted record third-quarter revenue of $8.4 billion and a $270 million profit, but fuel costs ran above plan and the airline cut its full-year profit forecast. It also trimmed 2026 capacity growth, named TAP Air Portugal and LOT Polish Airlines as new partners, and set a 2027 opening for its first airport lounges.
The numbers
Southwest released results after the market closed on Wednesday, October 21, and held its earnings call on Thursday, October 22. Fuel averaged $3.92 a gallon, above the $3.70 to $3.75 it had assumed, and the airline now plans for about $4.55 a gallon in the fourth quarter.
| Measure (Q3 2026) | Result |
|---|---|
| Operating revenue | $8.4 billion, up 21.2% (third-quarter record) |
| Net income | $270 million, or $0.55 a share (up from $54 million) |
| Adjusted net income | $328 million, or $0.66 a share |
| Unit revenue (RASM) | Up 21.6%, an all-time record |
| Capacity | Down 0.4% |
| Fleet at quarter end | 803 aircraft (20 Boeing 737-8s delivered, 20 aircraft retired) |
| Employees (active full-time equivalent) | 73,092, up 1.2% |
| Profit-sharing expense | $62 million, up from $11 million |
The quarter also included $30 million of severance costs tied to corporate workforce reductions.
Outlook
- Full year 2026: adjusted earnings of $2.60 to $2.85 a share. Quartz reports this is a cut to the earlier forecast; the previous range was not given in the release (TBA).
- Full-year capacity: growth of about 1.2%, down from about 1.5%.
- Fourth quarter: capacity up 3% to 4%, unit revenue up 19% to 21%, adjusted earnings of $0.55 to $0.80 a share.
- 737-700 seats: six seats are being removed from each 737-700 to create extra-legroom rows, which adds about a point to fourth-quarter unit costs.
- 2027: no capacity plan yet. Southwest will hold a Capital Markets Day in New York on March 2, 2027.
Fleet, product and partners
- Southwest expects 67 Boeing 737-8 and 737-7 deliveries and about 60 retirements in 2026.
- Starlink Wi-Fi is due across the fleet by fall 2027.
- The first Southwest Icon Lounges are expected to welcome guests in 2027. Locations are TBA.
- Rapid Rewards is adding a Platinum tier, a faster path to status through card spending, and Milestone Rewards.
- TAP Air Portugal and LOT Polish Airlines are now Southwest’s tenth and eleventh airline partners.
- Southwest says it is the first U.S. airline to let customers shop for flights through ChatGPT.
What it means for non-revs
- Little growth means few extra seats. Capacity rises only about 1.2% this year. Fourth-quarter flying is up 3% to 4%, which helps a little over the holidays, but expect full flights on peak days.
- Fewer seats on the 737-700. Each -700 loses six seats to extra-legroom rows, so open-seat counts on those aircraft will drop. Check the aircraft type when you list.
- Profit sharing is building. Southwest booked $62 million of profit-sharing expense in the quarter, against $11 million a year ago.
- New partners, unknown staff travel rules. The release does not say whether the TAP or LOT partnerships include any reduced-rate travel for employees. Check with your pass bureau before assuming.
Sources
- Southwest Airlines via PR Newswire — Southwest Airlines Reports Third Quarter 2026 Results; Record Revenue Performance Drives Year-Over-Year Margin Expansion
- Quartz — Southwest Airlines Q3 2026 earnings: full-year profit forecast cut
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