Southwest reported adjusted earnings per share for the third quarter of 66 cents, beating the LSEG consensus of 58 cents. Adjusted revenue for the quarter came in at $8.42 billion, above the LSEG estimate of $8.25 billion. Reported net income for the quarter was $270 million, or 55 cents per share on the reported basis.
That compares with net income of $54 million, or 10 cents per share, in the third quarter a year earlier. After removing one-time items, the company posted the 66 cent adjusted EPS for the quarter.
Despite the solid quarter, Southwest reduced its full-year 2026 adjusted EPS guidance to between $2.60 and $2.85. In July the airline had guided to $3.25 to $4.25. For the fourth quarter, the company projected adjusted EPS spanning 55 to 80 cents.
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Southwest said average passenger ticket price in the third quarter was $231.69, a figure that a spokesperson said excludes ancillary fees. The carrier carried 33.47 million revenue passengers in the quarter, a decline of 3.2% from the same period a year earlier.
According to the airline, unit revenue - the metric that reflects average fares - could climb as high as 21% from a year ago, and capacity is slated to grow as much as 4% compared with the prior year.
Southwest has shifted long-standing policies to boost revenue, ending practices such as open seating and the allowance of two complimentary checked bags per passenger, and adding fees for many seat selections and checked bags. Bob Jordan wrote in the earnings release, "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."
Delta Air Lines and United Airlines also lowered profit outlooks this month and missed analysts' expectations on revenue and profit in the third quarter.
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