Southwest Airlines (LUV) Q3 2026 earnings summary

Executive summary

• Q3 operating revenue reached a record $8.422B, up 21.2% YoY; adjusted operating margin rose 4.8 points to 5.4% despite an $821M fuel-cost headwind.

• Adjusted net income was $328M and adjusted diluted EPS was $0.66; after-tax adjusted ROIC was 11.3%.

• Transformation focus shifted toward business optimization, customer experience, product and loyalty initiatives.

Financial highlights

• Passenger revenue rose 22.8% to $7.754B; other revenue increased 4.5% to $621M.

• GAAP operating income was $379M and net income was $270M, versus $35M and $54M in Q3 2025; adjusted operating income was $452M.

• Operating expenses increased 16.3% to $8.043B, including fuel expense up 61.7% to $2.152B and salaries, wages and benefits up 10.0% to $3.542B.

• 9M operating revenue was $24.104B; adjusted operating income was $1.367B and adjusted net income was $1.019B.

• 9M diluted EPS was $1.47 reported and $2.05 adjusted, versus $0.21 and $0.38 in 2025.

Outlook and guidance

• Q4 adjusted EPS guidance is $0.55–$0.80; ASM growth is forecast at 3%–4%, RASM growth at 19%–21%, and CASM-X growth at 4.0%–4.5% YoY.

• FY2026 adjusted EPS guidance is $2.60–$2.85; capacity growth is expected at ~1.2%, versus prior guidance of ~1.5%.

• FY2026 net capital spending is forecast at $2.5B–$2.75B, including asset-sale and sale-leaseback proceeds.

• Q4 fuel assumptions use the Oct. 15 forward curve, including $4.553 per gallon; expected consumption is ~573M gallons, with each 1¢/gallon change affecting expense by $5.7M.

• Management sees a path to meaningful YoY margin expansion in 2027, including under a high-fuel scenario; detailed guidance is planned in three months.