Southwest Airlines Cuts 2026 Profit Forecast to $2.60–$2.85 Per Share on Higher Fuel Costs

Southwest Airlines has lowered its full-year profit forecast, attributing the reduced outlook to rising fuel costs. The carrier now expects adjusted full-year earnings of $2.60 to $2.85 per share, down from its July guidance of $3.25 to $4.25 per share. Southwest is paying almost $1 billion per quarter to cover the increase in fuel costs, according to its most recent fiscal report. It is the third major US carrier to curtail its projection for the year, joining American Airlines and United Airlines, which also recalculated their margins this month.

In the third quarter report, CEO Bob Jordan said: "Robust demand continued in the fourth quarter, and we are seeing encouraging progress across our product and loyalty initiatives. We remain confident in our ability to further strengthen earnings, improve returns, and expand margins over time." Jordan has reassured shareholders that customers will keep booking flights despite higher airfares in 2026.

To protect margins, major carriers are raising domestic fares, with double-digit increases for holiday travelers. The market exit of low-cost carrier Spirit Airlines, long associated with the so-called 'Spirit Effect' of lower fares at airports it served, gives legacy carriers more room to raise prices. Frontier and Breeze have scaled back, and smaller carriers face elevated fuel bills and restricted gate access at primary airports. Many major carriers have also limited capacity growth, reducing available seats.

Southwest has completed its conversion from a low-cost carrier to a full-service, legacy-style airline, a shift driven by activist hedge fund Elliott Investment Management, led by Paul Singer. Commentary from Jordan has also fueled speculation that Southwest may add a widebody jet to its fleet for the first time.