Key Takeaways Southwest Airlines plans four lounges for late 2027, with at least seven more locations planned. LUV's Chase partnership and planned 2027 premium credit card could lift engagement & ancillary revenue. LUV faces investment and execution risks, plus fuel, labor, regulatory and aircraft-delivery pressures. Southwest Airlines’ (LUV - Free Report) plan to launch its first-ever airport lounge network marks a significant step toward enhancing its premium offerings and customer experience. The initial four lounges at Austin-Bergstrom International Airport, Baltimore/Washington International Thurgood Marshall Airport, Daniel K. Inouye International Airport in Honolulu and Nashville International Airport are expected to welcome guests in late 2027, with at least seven additional locations planned.
The initiative should strengthen Southwest’s Rapid Rewards loyalty program and help the company attract and retain higher-value customers. Its partnership with Chase, along with the planned launch of a premium Southwest Rapid Rewards credit card in 2027, could further boost card adoption, customer engagement and ancillary revenues.
The lounge expansion also supports LUV’s broader strategy to evolve beyond its traditional low-cost carrier model and improve its competitive positioning. By offering premium amenities, locally inspired dining and travel benefits, the company can better compete with airlines that already have established lounge networks.
However, the initiative will require substantial investment and successful execution across multiple locations. Southwest also continues to face risks from economic uncertainty, geopolitical developments, fuel-price volatility, labor matters, regulatory actions and aircraft-delivery constraints, which could weigh on its financial performance and limit the benefits of its customer-experience investments.
LUV's Share Price PerformanceLUV’s shares have gained 24.3% over the past year against the Transportation - Airline industry’s 1.2% decline.
Image Source: Zacks Investment Research
LUV’s Zacks RankLUV currently carries a Zacks Rank #3 (Hold).
Stocks to ConsiderInvestors interested in the Zacks Transportation sector may consider Expeditors International of Washington, Inc. (EXPD - Free Report) and Seanergy Maritime Holdings (SHIP - Free Report) .
EXPD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Expeditors has an expected earnings growth rate of 28.6% for 2026. The company has an encouraging earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 17.15%.
Seanergy Maritime Holdings currently sports a Zacks Rank #1.
SHIP has an expected earnings growth rate of more than 100% for the current year. The company has an encouraging earnings surprise history. Its earnings topped the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 38%.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
DALLAS, Sept. 3, 2026 /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) Executive Vice President & Chief Financial Officer Tom Doxey will participate in a fireside chat at the Morgan Stanley 14th Annual Laguna Conference on September 16 at 12:20 pm PST. Morgan Stanley will be webcasting the audio presentation live. A link to the webcast will be made available via the Investor Relations page on the Southwest website. Details of the audio webcast are as follows:
Date:
September 16, 2026
Time:
12:20pm PST
Speaker:
Tom Doxey, Executive Vice President & Chief Financial Officer
Web Address:
www.investors.southwest.com
To access the live audio webcast and subsequent replay, click on the link above, or go to www.southwest.com and click on "Investor Relations" under the "About Southwest" menu at the bottom of the page. The audio webcast can be found on the homepage or by clicking "Calendar" under the "News & Events" header.
Southwest Airlines (LUV.N) on Wednesday unveiled plans to open its first-ever airport lounges, as the carrier steps up efforts to attract higher-spending premium travelers and diversify revenue streams.
The airline, which has been working to shed its low-cost image and boost ancillary revenue through assigned seating, extra-legroom seats and other product enhancements, said it would partner with JPMorgan Chase (JPM.N) to launch its first airport lounges.
Airport lounges have become a powerful attraction for travelers as they offer a quieter place to work or relax, complimentary food and drinks and a more seamless airport experience. For airlines, they help lock in customers, support premium fares and drive spending on lucrative co-branded credit cards.
Southwest will roll out a new Chase-issued co-branded credit card in 2027 to provide customers access to its airport lounge network.
It initially plans to open four lounges in Austin, Baltimore, Honolulu and Nashville. Construction is underway, with the lounges expected to begin opening in late 2027.
Airlines worldwide have been hit by a sharp rise in fuel prices stemming from the U.S.-Israeli war in Iran, squeezing already thin margins.
Carriers with a stronger suite of premium offerings are better positioned to weather the pressure as they can lure travelers willing to pay more for higher-margin services such as premium seating, lounge access and other upgrades.
Southwest has been overhauling its business to better compete with the network carriers following pressure from activist investor Elliott Investment Management and weaker profit margins after the pandemic.
CEO Bob Jordan signaled in May that Southwest could add more cabin options, including "true first class," and is likely over time to delve into long-haul international flying. He, however, said those were still ideas.
Jordan has previously acknowledged that the carrier loses customers to rivals because it does not serve destinations such as London or offer premium amenities, including airport lounges.
Southwest Airlines on Wednesday unveiled plans for its network of airport lounges that it's been hinting at for months.
The carrier said its first lounges would debut in Austin, Texas; Baltimore; Honolulu; and Nashville, Tennessee. It said construction has already begun at those airports and it expects to open those locations in late 2027.
The airline is partnering with Chase on the effort, saying it wants to build on that company's Sapphire Reserve Lounge Network.
"Our lounges will be a natural extension of that experience, offering Customers a place to relax and experience the Southwest brand in a new way," Tony Roach, Southwest executive vice president, said in a statement. "The introduction of a lounge network represents a strategic investment in Rapid Rewards and deepens our 30-year partnership with Chase."
The airline said customers can get into its lounges with a new, premium Southwest Rapid Rewards credit card that Chase will issue. It said the card will launch next year, but didn't provide any additional details about how much it would cost.
Southwest said it's planning to open seven more lounges over the next several years "across high-demand business and leisure markets."
CEO Bob Jordan has been talking about the airline getting into lounges for months, telling CNBC in December that it was "actively pursuing" the possibility of having a network of locations.
"I think lounges would be a huge, next benefit for our customers," Jordan said at the time.
Southwest's move comes as carriers from Delta Air Lines to JetBlue Airways — along with credit card companies like American Express, Capital One and Chase — have been building airport lounges to reel in and retain higher-spending consumers.
Southwest, which carries more customers domestically than any other airline, has drastically changed its business model over the past year and a half. It got rid of its famed open seating in favor of assigned seats and started charging customers to check bags to increase revenue as pressure ramped up from activist Elliott Investment Management.
Southwest lounge network represents the latest step in elevating the Customer Experience
, /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) today unveils plans for its first-ever airport lounge network, marking the next chapter of the Southwest Airlines® travel experience.
Southwest is partnering with Chase to bring together Southwest's signature Hospitality and the success of the Chase Sapphire Reserve Lounge Network℠ to create a premium and welcoming airport experience. Each lounge will combine the warmth and friendliness Customers expect from Southwest with sophisticated design, locally-inspired dining, high-quality amenities, and valuable travel benefits that are offered today in the Chase Sapphire Reserve Lounge Network.
"Southwest Airlines has built one of the most trusted brands in travel1 by delivering authentic Hospitality that Customers value. Our lounges will be a natural extension of that experience, offering Customers a place to relax and experience the Southwest brand in a new way," said Tony Roach, Executive Vice President, Chief Customer & Brand Officer at Southwest Airlines. "The introduction of a lounge network represents a strategic investment in Rapid Rewards and deepens our 30-year partnership with Chase."
At which airports will I be able to access Southwest lounges?
Construction has begun on the first four Southwest lounges, and the first guests are expected to be welcomed in late 2027. These locations include:
Austin-Bergstrom International Airport Baltimore/Washington International Thurgood Marshall Airport Daniel K. Inouye (Honolulu) International Airport Nashville International Airport This is just the beginning of a broader footprint across the Southwest system, with at least seven more lounges planned to open over the next several years across high-demand business and leisure markets.
How do I gain access to the Southwest lounges?
A new, premium, Southwest Rapid Rewards® Credit Card issued by Chase will be launching in 2027 and will provide access to the new Southwest lounge network.
ABOUT SOUTHWEST AIRLINES CO.
Southwest Airlines Co. operates one of the world's most admired and awarded airlines, offering its one-of-a-kind value and Hospitality at 120 airports across 12 countries. Southwest took flight in 1971 to democratize the sky through friendly, reliable, and low-cost air travel and now carries more air travelers flying nonstop within the United States than any other airline2. By empowering its more than 73,0003 People to deliver unparalleled Hospitality, the maverick airline cherishes a passionate loyalty among more than 134 million Customers carried in 2025. Southwest leverages a unique legacy and mission to serve communities around the world including harnessing the power of its People and Purpose to put communities at the Heart of its success. Learn more by visiting Southwest.com/citizenship.
As ranked in the Forbes' Most Trusted Companies in America for 2026. Based on U.S. Dept. of Transportation quarterly Airline Origin & Destination Survey as of Q4 2025. Fulltime-equivalent active Employees as of June 30, 2026. Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) Southwest's airport lounge network, including with respect to expected timing, number, and locations of the lounges; and (ii) Southwest's strategic investments in its loyalty program, including expected benefits and Customer experiences. Forward-looking statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the impact of geopolitical conflicts, fears or actual outbreaks of diseases, extreme or severe weather and natural disasters, actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities), governmental actions, consumer perception, consumer uncertainties with respect to trade policies or government shutdowns (including the imposition of tariffs), economic conditions, banking conditions, fears or actual acts of terrorism or war, sociodemographic trends, and other factors beyond Southwest's control, on consumer behavior and Southwest's results of operations and business decisions, plans, strategies, and results; (ii) Southwest's ability to timely and effectively implement, transition, operate, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives, including with respect to revenue management and assigned and premium seating; (iii) consumer behavior and response with respect to Southwest's new commercial products and policies; (iv) the impact of fuel price changes, fuel price volatility, and fuel availability on Southwest's business plans and results of operations; (v) the impact of governmental regulations and other governmental actions, including with respect to government shutdowns, as well as Southwest's ability to obtain any required governmental approvals, on Southwest's business plans, results, and operations; (vi) Southwest's dependence on The Boeing Southwest ("Boeing") and Boeing suppliers with respect to Southwest's aircraft deliveries, Boeing MAX 7 aircraft certifications, fleet and capacity plans, operations, maintenance, strategies, and goals; (vii) Southwest's dependence on the Federal Aviation Administration with respect to, among other things, the certification of the Boeing MAX 7 aircraft; (viii) Southwest's dependence on other third parties, in particular with respect to its technology plans, its plans and expectations related to revenue management, online travel agencies, operational reliability, fuel supply, maintenance, Global Distribution Systems, environmental sustainability, and the impact on Southwest's operations and results of operations of any third-party delays or nonperformance; (ix) Southwest's ability to timely and effectively prioritize its initiatives and focus areas and related expenditures; (x) the impact of labor matters on Southwest's business decisions, plans, strategies, and results; (xi) Southwest's ability to obtain and maintain adequate infrastructure and equipment to support its operations and initiatives; (xii) Southwest's dependence on its workforce, including its ability to employ and retain sufficient numbers of qualified Employees with appropriate skills and expertise to effectively and efficiently maintain its operations and execute Southwest's plans, strategies, and initiatives; (xiii) the cost and effects of the actions of activist shareholders; and (xiv) other factors, as described in Southwest's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in Southwest's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Southwest Airlines just fell harder than every major carrier and the entire sector fund combined, and the reason traces back to one strategic decision the airline made long before oil prices turned ugly.
Southwest Airlines (NYSE:LUV | LUV Price Prediction) stock has emerged as the sector’s biggest laggard over the past month, and the reason pertains to a single strategic decision made well before crude oil turned higher this summer.
Southwest Airlines shares are down 2% to $38.67 in Monday midday trading, and the stock has fallen 14% over the past month. That trails the main U.S. carriers and a well-known airline sector fund.
The U.S. Global Jets ETF (NYSEARCA:JETS) is down 9% to $28.50 over the past month, so the entire group repriced together. Southwest Airlines stock simply fell the most, and the gap between Southwest Airlines and the fund is what this article has to explain.
Fuel Repricing Hit the Whole Group The peer moves confirm a broad sector event. Delta Air Lines (NYSE:DAL) stock is down 11% over the past month. American Airlines Group (NASDAQ:AAL) stock is down 12% over the past month.
United Airlines Holdings (NASDAQ:UAL) stock is down 11% over the past month. Crude oil strengthened through the month, and U.S. strikes on Iranian targets pushed WTI crude oil above $86 in the current session. Jet fuel is an airline’s largest variable cost, which is why the whole group fell together.
Why Southwest Airlines Fell Hardest Southwest Airlines discontinued its fuel hedging program, leaving it fully exposed to price swings that hedged peers can absorb more gradually. That’s the cleanest available explanation for Southwest Airlines underperforming three larger carriers and the sector fund at the same time.
The guidance reset amplified the pressure. On July 23, Southwest Airlines replaced its prior full-year 2026 adjusted EPS guidance of at least $4 with a range of $3.25 to $4.25, reflecting the forward fuel curve as of July 17 and an estimated year-to-date fuel headwind of $1.33 per share. That lowered the earnings bar just before this month’s decline.
The bull side is genuinely strong. Southwest Airlines’ second-quarter 2026 adjusted EPS reached $0.94, up 120% year over year, with adjusted operating revenue setting a record of $8.7 billion on capacity growth of just 0.2% and adjusted operating margin expanding to 6.7%. CEO Bob Jordan stated on the second-quarter 2026 call, “While fuel prices have remained volatile and elevated, industry recapture has been swift and pricing has remained sticky.” Southwest Airlines’ managed business revenue grew 30% year over year and Southwest Airlines ended the quarter with $5.3 billion of liquidity.
The bear side is equally direct. The operating improvement is real, yet fuel is outrunning it, and with no hedges Southwest Airlines has no buffer if crude oil keeps climbing. Southwest Airlines also guided fourth-quarter capacity up 4% to 4.5% year over year, its largest sequential third-to-fourth-quarter increase, adding seats into a market where costs are rising.
What to Watch Next Investors can watch for the next monthly jet fuel print and any Southwest Airlines commentary on whether industry pricing continues to recapture the fuel move. If crude oil holds above $86, the fuel curve embedded inside the $3.25 to $4.25 EPS range gets meaningfully harder to hit, and the same math applies to Delta Air Lines, American Airlines Group and United Airlines Holdings.
Cautious position sizing should be considered with airline stocks now, including LUV stock. With no hedge program to smooth results, Southwest Airlines carries more single-variable risk than Delta Air Lines or United Airlines Holdings on any given fuel move, so anyone weighing a starter position should size to that volatility rather than to the second-quarter headline. The next scheduled catalyst is Q3 2026 earnings, when management could narrow or refresh the full-year range and either validate the transformation thesis or confirm that fuel has taken over the story.
Contact [email protected] for any questions or corrections.
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Stock to Watch: Southwest Airlines (LUV - Free Report) Based in Dallas, TX, Southwest Airlines is a passenger airline that provides scheduled air transportation in the United States and 'ten near-international' markets. The company was incorporated in Texas in 1967 and commenced operations in 1971 with three Boeing 737 jets serving the cities of Dallas, Houston and San Antonio.
LUV is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.
It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 12.24; value investors should take notice.
Seven analysts revised their earnings estimate upwards in the last 60 days for fiscal 2026. The Zacks Consensus Estimate has increased $0.33 to $3.32 per share. LUV boasts an average earnings surprise of +271.1%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, LUV should be on investors' short list.
Canada Pension Plan Investment Board bought a new position in shares of Southwest Airlines Co. (NYSE:LUV – Free Report) in the 2nd quarter, according to its most recent disclosure with the SEC. The institutional investor bought 215,300 shares of the airline’s stock, valued at approximately $11,071,000.
A number of other hedge funds and other institutional investors have also recently made changes to their positions in LUV. Franklin Resources Inc. increased its holdings in Southwest Airlines by 7.0% in the 4th quarter. Franklin Resources Inc. now owns 40,200,530 shares of the airline’s stock worth $1,661,488,000 after acquiring an additional 2,626,853 shares in the last quarter. BlackRock Inc. acquired a new stake in shares of Southwest Airlines in the second quarter valued at about $1,538,382,000. Invesco Ltd. increased its stake in shares of Southwest Airlines by 9.2% during the third quarter. Invesco Ltd. now owns 6,837,197 shares of the airline’s stock worth $218,175,000 after purchasing an additional 577,326 shares in the last quarter. Morgan Stanley increased its stake in shares of Southwest Airlines by 4.1% during the fourth quarter. Morgan Stanley now owns 6,228,475 shares of the airline’s stock worth $257,423,000 after purchasing an additional 244,891 shares in the last quarter. Finally, Dimensional Fund Advisors LP raised its position in shares of Southwest Airlines by 2.1% during the 1st quarter. Dimensional Fund Advisors LP now owns 5,763,154 shares of the airline’s stock worth $216,472,000 after purchasing an additional 117,833 shares during the last quarter. Hedge funds and other institutional investors own 80.82% of the company’s stock.
Analyst Upgrades and Downgrades Several equities research analysts recently issued reports on LUV shares. Morgan Stanley lifted their price objective on Southwest Airlines from $60.00 to $65.00 and gave the stock an “overweight” rating in a report on Monday, July 6th. Raymond James Financial reduced their target price on Southwest Airlines from $60.00 to $54.00 and set an “outperform” rating for the company in a report on Monday, August 24th. Zacks Research upgraded Southwest Airlines from a “strong sell” rating to a “hold” rating in a research report on Thursday, June 25th. The Goldman Sachs Group lifted their price target on Southwest Airlines from $30.00 to $35.00 and gave the stock a “sell” rating in a research note on Thursday, July 2nd. Finally, Bank of America boosted their price target on Southwest Airlines from $40.00 to $45.00 and gave the stock an “underperform” rating in a research report on Wednesday, July 1st. Nine investment analysts have rated the stock with a Buy rating, nine have given a Hold rating and four have issued a Sell rating to the company. According to data from MarketBeat.com, Southwest Airlines presently has a consensus rating of “Hold” and an average price target of $49.01.
Read Our Latest Analysis on Southwest Airlines Southwest Airlines Stock Down 0.2% Shares of NYSE LUV opened at $39.70 on Friday. The stock has a market cap of $19.42 billion, a PE ratio of 24.36, a P/E/G ratio of 0.36 and a beta of 1.14. The company has a current ratio of 0.49, a quick ratio of 0.42 and a debt-to-equity ratio of 0.54. Southwest Airlines Co. has a 12-month low of $29.26 and a 12-month high of $55.11. The company has a 50-day moving average of $46.59 and a 200 day moving average of $44.12.
Southwest Airlines (NYSE:LUV – Get Free Report) last released its earnings results on Wednesday, July 22nd. The airline reported $0.94 earnings per share for the quarter, topping analysts’ consensus estimates of $0.52 by $0.42. The business had revenue of $8.72 billion for the quarter, compared to analyst estimates of $8.58 billion. Southwest Airlines had a net margin of 2.78% and a return on equity of 14.15%. The business’s revenue was up 16.4% on a year-over-year basis. During the same period last year, the company posted $0.43 EPS. Southwest Airlines has set its FY 2026 guidance at 3.250-4.250 EPS and its Q3 2026 guidance at 0.500-0.750 EPS. As a group, sell-side analysts predict that Southwest Airlines Co. will post 3.32 EPS for the current fiscal year.
Southwest Airlines Dividend Announcement The business also recently disclosed a quarterly dividend, which will be paid on Thursday, September 24th. Investors of record on Thursday, September 3rd will be given a dividend of $0.18 per share. The ex-dividend date is Thursday, September 3rd. This represents a $0.72 dividend on an annualized basis and a yield of 1.8%. Southwest Airlines’s dividend payout ratio (DPR) is presently 44.17%.
Southwest Airlines Company Profile (Free Report)
Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest’s operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.
Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.
See Also Five stocks we like better than Southwest Airlines From SaaS-pocalypse to Perfect Storm: Workday’s AI Growth Story Strengthens These 3 GARP Stocks Show Why Growth and Value Do Not Have to Clash Venture Into High-Volatility Corners of the Market With These 3 ETFs 3 Retail Stocks to Watch After a Big Consumer Earnings Week Want to see what other hedge funds are holding LUV? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Southwest Airlines Co. (NYSE:LUV – Free Report).
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A month has gone by since the last earnings report for Southwest Airlines (LUV - Free Report) . Shares have lost about 10.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Southwest due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
Southwest Airlines Q2 Earnings Beat EstimatesSouthwest Airlines reported second-quarter 2026 adjusted earnings of 94 cents per share, up 118.6% year over year and 80.8% above the Zacks Consensus Estimate of 52 cents. Record operating revenues of $8.43 billion rose 16.4% but missed the consensus mark of $8.58 billion by 1.7%.
Results benefited from demand for enhanced products, record managed business revenues and cost discipline despite an $889 million increase in fuel expense. Adjusted unit revenues jumped 20.1%, while adjusted operating margin expanded 3.3 points to 6.7%.
LUV's Passenger Revenues Power Top-Line GrowthPassenger revenues, which accounted for 91.9% of the top line, increased 16.9% year over year to $7.75 billion. The improvement reflected higher fares and strong customer response to Southwest’s expanded commercial offerings.
Freight revenues rose 13.6% to $50 million. Other operating revenues increased 11.2% to $637 million, providing another source of growth beyond ticket sales.
Southwest Airlines Posts Stronger Revenue ProductivityRevenue passenger miles, a measure of traffic, increased 1.2% year over year to 37.35 billion. Capacity, measured in available seat miles, edged up only 0.2% to 47.09 billion, allowing demand growth to outpace supply.
The load factor improved 0.8 percentage points to 79.3%. Average passenger fare climbed 20.9% to $225.61, while passenger revenue per available seat mile advanced 16.7% to 16.45 cents. Revenue passengers carried declined 3.3% to 34.3 million.
LUV Controls Non-Fuel Costs as Fuel Expense SurgesTotal operating expenses increased 16.1% year over year to $8.15 billion. Aircraft fuel and related taxes surged 67% to $2.22 billion, representing the largest cost headwind during the quarter.
Fuel cost per gallon increased 69% to $3.92. Still, cost per available seat mile excluding fuel, special items and profit sharing rose a more moderate 3.4% to 12.45 cents, coming in below the company’s prior guidance.
Adjusted operating income climbed 138.8% to $585 million. Reported operating income increased 26.7% to $285 million despite the sharp rise in fuel costs.
Southwest Airlines' Commercial Initiatives Gain TractionManaged business revenues reached a quarterly record and increased 30% year over year. The performance highlighted stronger demand from corporate customers and broadened the company’s revenue mix.
Rapid Rewards enrollment rose 35%, while the loyalty program reached nearly 100 million members and posted record tier qualifiers. Acquisitions for the Chase co-branded credit card accelerated 28%, with double-digit growth in every month of the quarter.
Southwest also completed service rollouts to five new destinations and added Air Premia as its ninth airline partner. The carrier operated its first aircraft equipped with Starlink connectivity during the quarter.
LUV Generates Higher Operating Cash FlowSouthwest ended June with cash and cash equivalents of $3.79 billion, up from $3.23 billion at the end of 2025. Total liquidity was $5.3 billion, including a $1.5 billion revolving credit facility.
Net cash provided by operating activities rose to $530 million from $401 million a year earlier. Capital expenditures totaled $818 million, while proceeds from property and equipment sales reached $258 million.
The company paid $88 million in dividends during the quarter. It ended the period with $3.79 billion of long-term debt, excluding current maturities, and reported gross leverage of 2.1 times.
Southwest Airlines Issues Q3 and 2026 GuidanceFor third-quarter 2026, Southwest expects adjusted earnings of 50-75 cents per share. Capacity is projected to decline 1% to remain flat, while unit revenues are forecast to increase 17.5-19.5% year over year.
Third-quarter cost per available seat mile excluding fuel, special items and profit sharing is expected to rise 3.5-4%. Fuel cost per gallon is projected between $3.70 and $3.75.
For 2026, management expects adjusted earnings of $3.25-$4.25 per share, replacing its prior expectation of at least $4. Capacity growth is now forecast at roughly 1.5%, down from 2%. Net capital spending is expected near the low end of, or below, the previously announced $3-$3.5 billion range.
How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -12.83% due to these changes.
VGM ScoresCurrently, Southwest has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Southwest has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Assenagon Asset Management S.A. reduced its holdings in Southwest Airlines Co. (NYSE:LUV – Free Report) by 81.6% in the 2nd quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC). The institutional investor owned 85,093 shares of the airline’s stock after selling 377,810 shares during the quarter. Assenagon Asset Management S.A.’s holdings in Southwest Airlines were worth $4,375,000 at the end of the most recent reporting period.
A number of other hedge funds also recently modified their holdings of the business. Franklin Resources Inc. increased its stake in Southwest Airlines by 7.0% during the 4th quarter. Franklin Resources Inc. now owns 40,200,530 shares of the airline’s stock worth $1,661,488,000 after purchasing an additional 2,626,853 shares in the last quarter. Invesco Ltd. raised its holdings in shares of Southwest Airlines by 9.2% during the third quarter. Invesco Ltd. now owns 6,837,197 shares of the airline’s stock worth $218,175,000 after acquiring an additional 577,326 shares during the period. Morgan Stanley increased its holdings in Southwest Airlines by 4.1% during the 4th quarter. Morgan Stanley now owns 6,228,475 shares of the airline’s stock worth $257,423,000 after purchasing an additional 244,891 shares in the last quarter. Dimensional Fund Advisors LP raised its stake in shares of Southwest Airlines by 2.1% in the 1st quarter. Dimensional Fund Advisors LP now owns 5,763,154 shares of the airline’s stock valued at $216,472,000 after purchasing an additional 117,833 shares during the period. Finally, Norges Bank acquired a new stake in shares of Southwest Airlines in the 4th quarter valued at about $172,038,000. Institutional investors and hedge funds own 80.82% of the company’s stock.
Southwest Airlines Price Performance Shares of LUV opened at $45.03 on Thursday. The company has a market cap of $22.03 billion, a price-to-earnings ratio of 27.63, a PEG ratio of 0.40 and a beta of 1.14. Southwest Airlines Co. has a 1-year low of $29.26 and a 1-year high of $55.11. The company’s fifty day simple moving average is $47.31 and its 200 day simple moving average is $44.60. The company has a current ratio of 0.49, a quick ratio of 0.42 and a debt-to-equity ratio of 0.54.
Southwest Airlines (NYSE:LUV – Get Free Report) last announced its quarterly earnings results on Wednesday, July 22nd. The airline reported $0.94 EPS for the quarter, beating analysts’ consensus estimates of $0.52 by $0.42. Southwest Airlines had a net margin of 2.78% and a return on equity of 14.15%. The firm had revenue of $8.72 billion during the quarter, compared to analysts’ expectations of $8.58 billion. During the same quarter last year, the company posted $0.43 earnings per share. The company’s revenue for the quarter was up 16.4% compared to the same quarter last year. Southwest Airlines has set its FY 2026 guidance at 3.250-4.250 EPS and its Q3 2026 guidance at 0.500-0.750 EPS. On average, research analysts forecast that Southwest Airlines Co. will post 3.45 earnings per share for the current fiscal year.
Southwest Airlines Announces Dividend The firm also recently announced a quarterly dividend, which will be paid on Thursday, September 24th. Stockholders of record on Thursday, September 3rd will be paid a dividend of $0.18 per share. This represents a $0.72 annualized dividend and a dividend yield of 1.6%. The ex-dividend date is Thursday, September 3rd. Southwest Airlines’s payout ratio is currently 44.17%.
Analyst Ratings Changes Several research firms have recently weighed in on LUV. Wells Fargo & Company upped their price objective on Southwest Airlines from $44.00 to $50.00 and gave the stock an “equal weight” rating in a research report on Tuesday, June 30th. Susquehanna lifted their target price on Southwest Airlines from $44.00 to $55.00 and gave the company a “neutral” rating in a research report on Tuesday, July 7th. The Goldman Sachs Group boosted their target price on Southwest Airlines from $30.00 to $35.00 and gave the company a “sell” rating in a research note on Thursday, July 2nd. JPMorgan Chase & Co. reduced their price target on Southwest Airlines from $60.00 to $59.00 and set an “overweight” rating for the company in a research report on Friday, July 24th. Finally, BMO Capital Markets raised their price target on shares of Southwest Airlines from $58.50 to $60.00 and gave the stock an “outperform” rating in a research note on Friday, July 24th. Nine research analysts have rated the stock with a Buy rating, nine have given a Hold rating and four have issued a Sell rating to the stock. According to MarketBeat.com, Southwest Airlines has a consensus rating of “Hold” and a consensus price target of $49.55.
Check Out Our Latest Stock Report on Southwest Airlines
Southwest Airlines Company Profile (Free Report)
Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest’s operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.
Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.
Read More Five stocks we like better than Southwest Airlines GE Vernova’s AI Power Boom Faces a Profit Test Cardinal Health Earnings: Can Perfection Get Priced In Twice? Nebius’ Q2 Beat Shows the AI Bottleneck Is Capacity, Not Demand Legacy Jet Builders Stall While Embraer Accelerates to New Highs Want to see what other hedge funds are holding LUV? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Southwest Airlines Co. (NYSE:LUV – Free Report).
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It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.
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What are the Zacks Style Scores? The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.
Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.
The Style Scores are broken down into four categories:
Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.
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Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.
How Style Scores Work with the Zacks Rank The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.
#1 (Strong Buy) stocks have produced an unmatched +23.94% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.
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Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Southwest Airlines (LUV - Free Report) Based in Dallas, TX, Southwest Airlines is a passenger airline that provides scheduled air transportation in the United States and 'ten near-international' markets. The company was incorporated in Texas in 1967 and commenced operations in 1971 with three Boeing 737 jets serving the cities of Dallas, Houston and San Antonio.
LUV is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.
It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 13.16; value investors should take notice.
Eight analysts revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.54 to $3.41 per share. LUV also boasts an average earnings surprise of +271.1%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, LUV should be on investors' short list.
, /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) today announced Jason Liberty, Chairman and Chief Executive Officer, Royal Caribbean Group, and Varun Krishna, Chief Executive Officer, Rocket Companies, will join the Company's Board of Directors, effective immediately.
The Board determined that adding two directors with extensive public company leadership experience and deep expertise in technology, digital innovation, commercial strategy, and financial leadership will further strengthen the Board as Southwest continues executing its strategic priorities and driving value for Shareholders.
"Jason and Varun are exceptional leaders who bring complementary experience leading complex, customer-focused companies through periods of growth, innovation, and transformation," said Doug Brooks, independent Chair of the Board. "Their perspectives will be valuable as Southwest continues to advance its strategic plan and deliver long-term value for our Shareholders."
"Southwest is one of the most respected and recognizable brands in travel, with a strong culture, a proud history, and exciting opportunities ahead," said Liberty. "I look forward to working with the Board and Leadership Team as the Company continues evolving its customer experience and positioning itself for sustained, long-term success."
"Southwest has a remarkable legacy of democratizing travel and building deep loyalty with Customers and Employees," said Krishna. "As a loyal customer, I'm honored to join the Board and contribute as Southwest continues innovating to serve Customers and build on its successes."
Liberty has served as Chairman and Chief Executive Officer of Royal Caribbean Group since 2025, after serving as Chief Executive Officer beginning in 2022 and as Chief Financial Officer for nine years before that. During more than two decades with Royal Caribbean Group, he has held multiple senior leadership roles spanning finance, strategy, technology, legal, shared services, and business operations. His broader industry leadership includes serving as Chair of the Cruise Lines International Association, the leading trade organization for the global cruise industry.
Krishna is the Chief Executive Officer of Rocket Companies, a financial technology platform that includes Rocket Mortgage, Redfin, and other consumer finance offerings. At Rocket Companies, Krishna is responsible for guiding business strategy and overseeing how Rocket's brands and products work together as an integrated platform. Before joining Rocket, Krishna held senior executive roles at Intuit, where he oversaw the organization's end-to-end suite of consumer and tax products and services. Prior to Intuit, Krishna held leadership positions at PayPal, Groupon, and Microsoft.
"On behalf of the Board and the Southwest Leadership Team, I'm pleased to welcome Jason and Varun," said Bob Jordan, President, Chief Executive Officer, and Vice Chairman of the Board. "Jason brings significant travel industry, operational, and financial leadership experience, while Varun brings deep expertise in digital products, innovation, and customer engagement. Together, their perspectives will strengthen our Board as we continue enhancing the Customer experience, improving performance, and executing our strategic priorities."
ABOUT SOUTHWEST AIRLINES CO.
Southwest Airlines Co. operates one of the world's most admired and awarded airlines, offering its one-of-a-kind value and Hospitality at 121 airports across 12 countries. Southwest took flight in 1971 to democratize the sky through friendly, reliable, and low-cost air travel and now carries more air travelers flying nonstop within the United States than any other airline.1 By empowering its more than 73,0002 People to deliver unparalleled Hospitality, the maverick airline cherishes a passionate loyalty among more than 134 million Customers carried in 2025. Southwest leverages a unique legacy and mission to serve communities around the world including harnessing the power of its People and Purpose to put communities at the Heart of its success. Learn more by visiting Southwest.com/citizenship.
1 Based on U.S. Dept. of Transportation quarterly Airline Origin & Destination Survey as of Q4 2025
2 Fulltime-equivalent active Employees as of June 30, 2026.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company's initiatives, strategic priorities, focus areas, core strengths, goals, and opportunities, including driving and delivering long-term value for Shareholders, advancing the Company's strategic plan, positioning the Company for sustained, long-term success, and improving performance; (ii) the Company's expectations with respect to strengthening the Board with complementary experience and perspectives; and (iii) the Company's expectations with respect to evolving and enhancing the Customer experience, innovating to serve Customers, and building on the Company's successes. These forward-looking statements are based on the Company's current estimates, intentions, beliefs, expectations, goals, strategies, and projections for the future and are not guarantees of future performance. Forward-looking statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the impact of geopolitical conflicts, fears or actual outbreaks of diseases, extreme or severe weather and natural disasters, actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities), governmental actions, consumer perception, consumer uncertainties with respect to trade policies or government shutdowns (including the imposition of tariffs), economic conditions, banking conditions, fears or actual acts of terrorism or war, sociodemographic trends, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (ii) the Company's ability to timely and effectively implement, transition, operate, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (iii) consumer behavior and response with respect to the Company's commercial products and policies; (iv) the impact of fuel price changes, fuel price volatility, and fuel availability on the Company's business plans and results of operations; (v) the impact of governmental regulations and other governmental actions, including with respect to government shutdowns, as well as the Company's ability to obtain any required governmental approvals, on the Company's business plans, results, and operations; (vi) the Company's dependence on The Boeing Company ("Boeing") and Boeing suppliers with respect to the Company's aircraft deliveries, Boeing MAX 7 aircraft certifications, fleet and capacity plans, operations, maintenance, strategies, and goals; (vii) the Company's dependence on the Federal Aviation Administration with respect to, among other things, the certification of the Boeing MAX 7 aircraft; (viii) the Company's dependence on other third parties, in particular with respect to its technology plans, its plans and expectations related to revenue management, online travel agencies, operational reliability, fuel supply, maintenance, Global Distribution Systems, environmental sustainability, and the impact on the Company's operations and results of operations of any third-party delays or nonperformance; (ix) the Company's ability to timely and effectively prioritize its initiatives and focus areas and related expenditures; (x) the impact of labor matters on the Company's business decisions, plans, strategies, and results; (xi) the Company's ability to obtain and maintain adequate infrastructure and equipment to support its operations and initiatives; (xii) the Company's dependence on its workforce, including its ability to employ and retain sufficient numbers of qualified Employees with appropriate skills and expertise to effectively and efficiently maintain its operations and execute the Company's plans, strategies, and initiatives; (xiii) the cost and effects of the actions of activist shareholders; and (xiv) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
July 23 was a banner day for commercial air travel. An incredible 153,359 commercial flights worldwide were tracked that day, a new record.
Of course, late July is peak season for global aviation, as that's when the North American, European, and Asian summer holiday schedules most closely align.
But the trend overall is rising. Last year was a record year for the aviation industry, and 2026 was expected to see worldwide passenger traffic grow 5% over 2025. It looks like it's well on its way to accomplishing that goal.
That's very good news for U.S. carriers like Delta Air Lines (DAL -0.70%), United Airlines Holdings (UAL +0.34%), and Southwest Airlines (LUV +0.23%). And even better news for their shareholders. Delta is up 35% so far this year, and both United and Southwest are up about 19%. So, they've significantly outperformed the broader market, which is up 13% year to date, as measured by the S&P 500 (^GSPC +0.62%).
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Despite higher jet fuel prices this year, some of which were passed on to customers via increased fares, demand for air travel has remained robust in 2026. There's also been a decline in capacity due to backlogs at major aircraft manufacturers Boeing and Airbus.
The three airlines posted impressive Q2 results in July All three carriers reported second-quarter results in July, and by and large, they were impressive.
Image source: Getty Images.
Delta beat Wall Street expectations on revenue and earnings for the second quarter. For full-year 2026, the airline is expected to post income of about $73 billion, 15% above 2025 levels, and earnings of $6.63 per share, which would be 14% higher than last year.
United Airlines also topped analysts' expectations for the second quarter on both earnings and revenue. And it raised its full-year earnings forecast to $9 to $11 per share, up from the previous range of $7 to $11. Analysts expect the company to earn $10.36 per share in 2026, a slight decline from 2025.
United did add that higher fuel prices could add up to $6 billion to its expenses this year.
Finally, Southwest reported earnings of $0.94 a share on revenue of $8.72 billion. Expectations were for earnings of $0.51 a share on revenue of $8.58 billion. The company's CFO said demand for air travel remains very strong, though rising fuel costs have forced it to raise fares.
While those results inspire optimism for these three stocks, investors should keep in mind that jet fuel accounts for between 20% and 30% of an airline's operating expenses, so further spikes in fuel costs due to the conflict in the Persian Gulf could be a major headwind for these carriers.
Are you taking a business trip anytime soon? Southwest Airlines might have just made your life easier.
On Monday, the Dallas-based airline announced its new Business Priority program, which will be available in early 2027.
Enrolled business travelers will get day-of-travel assistance and special travel perks as the airline competes for more, higher-paying business customers.
What you can get out of itWe’ve all been there: Your flight gets delayed, but you have a meeting later in the day you can’t miss.
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The Business Priority Program is aimed at giving business travelers more day-of flexibility and confidence to navigate these stressful situations.
The program will include preferred accommodations to help travelers quickly find alternate flights when plans are canceled or delayed. Qualifying travelers will also receive standby benefits and boarding privileges for better options on travel days.
The in-flight experience will improve, tooIn addition to Starlink internet access and in-seat power, Business Priority customers will get extra legroom and larger overhead bins, according to Southwest.
Sharing adventures with a friend is just one qualifying roundtrip flight away
, /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) today launches a special promotional Companion Pass® offer for Rapid Rewards® Members, making it easier than ever to fly with a family member, friend, or loved one for free.1 Eligible Customers can designate their Companion and travel with the promotional Companion Pass, which is valid for unlimited usage on qualifying flights from January 5 through March 3, 2027.1
To qualify, Rapid Rewards Members must:
Register for the promotion and purchase a Southwest® revenue flight (one qualifying round trip or two qualifying one-ways) using Rapid Rewards points, a combination of cash and points, or any other eligible form of payment, starting today through August 6, 2026; Travel by November 18, 2026; and Designate a Companion to fly for free (does not include taxes and fees from $5.60 one-way) with them on qualifying flights from January 5 through March 3, 2027. "The Companion Pass is one of the most valued benefits in travel, and this promotion makes it easier than ever for both new and existing Customers to experience the value of Rapid Rewards," said Nandika Suri, Vice President of Rapid Rewards. "Whether you're enrolling for the first time or have been a Member for years, this offer provides a simple and rewarding way to earn a promotional Companion Pass and share your next adventure with someone special."
One More Reason to Love Rapid Rewards®
Southwest offers access to free WiFi, including ultra-fast Starlink WiFi, to all Rapid Rewards Members thanks to T-Mobile.2 Customers can join Rapid Rewards to unlock access to free WiFi, tier benefits, and points by flying qualifying flights or spending with eligible partners. Members can purchase points to earn a reward to book their favorite destination or a new Southwest route. All Rapid Rewards rules and regulations apply at Southwest.com/rrterms.
Visit Southwest.com for the full Companion Pass promotion terms and conditions.1
ABOUT SOUTHWEST AIRLINES CO.
Southwest Airlines Co. operates one of the world's most admired and awarded airlines, offering its one-of-a-kind value and Hospitality at 121 airports across 12 countries. Southwest took flight in 1971 to democratize the sky through friendly, reliable, and low-cost air travel and now carries more air travelers flying nonstop within the United States than any other airline.3 By empowering its more than 73,0004 People to deliver unparalleled Hospitality, the maverick airline cherishes a passionate loyalty among more than 134 million Customers carried in 2025. Southwest leverages a unique legacy and mission to serve communities around the world including harnessing the power of its People and Purpose to put communities at the Heart of its success. Learn more by visiting Southwest.com/citizenship.
1 Does not include taxes and fees from $5.60 one-way. Register then book one qualifying round trip or two qualifying one-way Southwest® flights by 8/6/26. Travel by 11/18/26 Promotional Companion Pass® valid 1/1/27-3/7/27. Go to Southwest.com for full promotion terms.
2 Where available. Available only on WiFi-enabled designated aircraft.
3 Based on U.S. Dept. of Transportation quarterly Airline Origin & Destination Survey as of Q4 2025
4 Fulltime-equivalent active Employees as of March 31, 2026.
New Business Priority product and NDC solutions give businesses greater flexibility and choice throughout the journey
, /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) today announces new benefits for Southwest Business with the introduction of Business Priority and New Distribution Capability (NDC) connectivity. Designed for corporate travel programs, these new offerings provide eligible business travelers with day-of-travel assistance and partners with greater flexibility and choice to access Southwest® content through participating third-party booking tools.
"Southwest is focused on elevating the travel experience to meet the expectations of today's and tomorrow's business Customers through initiatives like assigned and Extra Legroom seating, cabin upgrades, including in-seat power, Starlink ultra-fast WiFi,1 larger overhead bins, and international partnerships," said Aileen Furlong, Vice President of Sales. "And Southwest Business is building on that by making it easier for corporate buyers to access these enhancements through expanded distribution options and priority travel from booking to boarding."
Advancing Managed Travel
Beginning in early 2027, Southwest's new Business Priority product will become available as an option for inclusion in corporate travel agreements for qualified Customers. Business Priority will aim to give business travelers of companies who receive its benefits access to preferred reaccommodation, standby, and boarding benefits that provide greater flexibility and confidence on the day of travel.
More Ways to Access Southwest
The airline is introducing NDC capabilities to provide new connectivity options and ensure Customers have access to Southwest's fare products and seating ancillary services in the channels they use every day. As part of this effort, Southwest is evolving its industry-leading, in-house API. This new direct-connect option is expected to be available to partners by the end of 2026.
Additionally, Southwest has selected Amadeus Altéa NDC, the Amadeus solution enabling personalized and enriched offers for Customers and their travelers through the third parties of their choice, including the Amadeus Travel Platform. This option is expected to be available later in 2027.
"As NDC adoption continues to accelerate across corporate travel, we are pleased to deepen our technology collaboration with Southwest and bring its NDC content to a wider audience. For travel management companies and business travel agencies, access to relevant airline content within existing workflows–including booking and servicing capabilities–is essential to supporting modern managed travel programs and delivering the choice, consistency and efficiency corporate customers increasingly expect," said Meg O'Keefe, Senior Vice President, Airlines, Americas at Amadeus.
These NDC enhancements reflect Southwest's commitment to delivering modern technology solutions across all channels, giving Customers and partners reliable access to consistent fare content, preferred seating products, and travel management capabilities.
Together, these new business travel benefits and distribution capabilities underscore Southwest's continued investment in its corporate travel product.
Visit Southwest.com/aboutbusiness to learn more, including how Southwest Business can be your organization's trusted business travel advisor.
ABOUT SOUTHWEST AIRLINES CO.
Southwest Airlines Co. operates one of the world's most admired and awarded airlines, offering its one-of-a-kind value and Hospitality at 121 airports across 12 countries. Southwest took flight in 1971 to democratize the sky through friendly, reliable, and low-cost air travel and now carries more air travelers flying nonstop within the United States than any other airline.2 By empowering its more than 73,0003 People to deliver unparalleled Hospitality, the maverick airline cherishes a passionate loyalty among more than 134 million Customers carried in 2025. Southwest leverages a unique legacy and mission to serve communities around the world including harnessing the power of its People and Purpose to put communities at the Heart of its success. Learn more by visiting Southwest.com/citizenship.
1 Where available. Available only on select WiFi-enabled designated aircraft.
2 Based on U.S. Dept. of Transportation quarterly Airline Origin & Destination Survey as of Q4 2025
3 Fulltime-equivalent active Employees as of March 31, 2026.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company's initiatives, strategic priorities, focus areas, core strengths, goals, and opportunities, including delivering more for business travelers, elevating the travel experience to meet the expectations of today's and tomorrow's business Customers through initiatives, providing greater flexibility, choice, and confidence for travel, and continued investment in the Company's corporate travel product; (ii) the Company's expectations with respect to delivering modern technology solutions across all channels, giving Customers and partners reliable access to consistent fare content, preferred seating products, and travel management capabilities; (iii) the Company's expectations with respect to enhanced benefits and booking options, Business Priority, and New Distribution Capability connectivity options and adoption, including Amadeus Altéa NDC and including the timing of introduction; and (iv) the Company's plans and expectations with respect to evolving the Company's industry-leading, in-house API, ensuring access to the Company's fare products and seating ancillary services, and making it easier to access product offering enhancements through expanded distribution options and priority travel. These forward-looking statements are based on the Company's current estimates, intentions, beliefs, expectations, goals, strategies, and projections for the future and are not guarantees of future performance. Forward-looking statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the impact of geopolitical conflicts, fears or actual outbreaks of diseases, extreme or severe weather and natural disasters, actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities), governmental actions, consumer perception, consumer uncertainties with respect to trade policies or government shutdowns (including the imposition of tariffs), economic conditions, banking conditions, fears or actual acts of terrorism or war, sociodemographic trends, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (ii) the Company's ability to timely and effectively implement, transition, operate, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (iii) consumer behavior and response with respect to the Company's commercial products and policies; (iv) the impact of fuel price changes, fuel price volatility, and fuel availability on the Company's business plans and results of operations; (v) the impact of governmental regulations and other governmental actions, including with respect to government shutdowns, as well as the Company's ability to obtain any required governmental approvals, on the Company's business plans, results, and operations; (vi) the Company's dependence on The Boeing Company ("Boeing") and Boeing suppliers with respect to the Company's aircraft deliveries, Boeing MAX 7 aircraft certifications, fleet and capacity plans, operations, maintenance, strategies, and goals; (vii) the Company's dependence on the Federal Aviation Administration with respect to, among other things, the certification of the Boeing MAX 7 aircraft; (viii) the Company's dependence on other third parties, in particular with respect to its technology plans, its plans and expectations related to revenue management, online travel agencies, operational reliability, fuel supply, maintenance, Global Distribution Systems, environmental sustainability, and the impact on the Company's operations and results of operations of any third-party delays or nonperformance; (ix) the Company's ability to timely and effectively prioritize its initiatives and focus areas and related expenditures; (x) the impact of labor matters on the Company's business decisions, plans, strategies, and results; (xi) the Company's ability to obtain and maintain adequate infrastructure and equipment to support its operations and initiatives; (xii) the Company's dependence on its workforce, including its ability to employ and retain sufficient numbers of qualified Employees with appropriate skills and expertise to effectively and efficiently maintain its operations and execute the Company's plans, strategies, and initiatives; (xiii) the cost and effects of the actions of activist shareholders; and (xiv) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
DALLAS, July 30, 2026 /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) Board of Directors declared a quarterly cash dividend of $.18 per share to Shareholders of record at the close of business on September 3, 2026, on all shares then issued and outstanding. The quarterly dividend will be paid on September 24, 2026.
Key Takeaways Southwest Airlines' adjusted EPS jumped 118.6% to 94 cents, beating the consensus estimate by 80.8%.LUV's operating margin rose 3.3 points to 6.7% as unit revenue gained 20.1% on nearly flat capacity.Southwest has $5.3 billion in liquidity, but fuel, Boeing dependence and higher costs cloud the rebound. Southwest Airlines Co. (LUV - Free Report) has a stronger investment case after a sharp earnings rebound and a major stock rally. Better revenue productivity, solid liquidity and shareholder returns support the recovery story.
The case is still balanced. Fuel exposure, Boeing-related execution risk and a valuation premium to the airline sub-industry limit how aggressively investors may want to chase the shares.
LUV’s Earnings Beat Strengthens the Bull CaseSouthwest Airlines reported second-quarter 2026 adjusted earnings of 94 cents per share, up 118.6% year over year. The result was 80.8% above the Zacks Consensus Estimate of 52 cents.
The earnings beat came despite a revenue miss. Operating revenues of $8.43 billion rose 16.4% but missed the consensus mark by 1.7%, showing that cost control and stronger unit economics were central to the quarter’s upside.
Southwest Airlines Restores Margin MomentumAdjusted operating income climbed 138.8% to $585 million. Adjusted operating margin expanded 3.3 percentage points to 6.7%, despite an $889 million year-over-year increase in fuel expense.
The improvement was not driven by broad volume growth. Capacity increased only 0.2%, while adjusted revenue per available seat mile jumped 20.1%, helped by higher fares, disciplined capacity, assigned and extra-legroom seating, bag fees and better revenue management.
LUV’s Valuation Sends Mixed SignalsLUV trades at 0.66X forward 12-month price-to-sales. That is above 0.53X for the Zacks airline sub-industry but below Southwest Airlines' five-year median of 0.88X.
That creates a split valuation picture. The stock may look inexpensive against its own history, but it does not offer a clear discount to direct industry benchmarks. Delta Air Lines (DAL - Free Report) and American Airlines Group (AAL - Free Report) remain relevant peers for investors comparing airline demand, pricing and cost exposure; Delta Air Lines operates a global network serving more than 290 destinations, while American Airlines' investor relations site provides financial information for stockholders and analysts.
Southwest Airlines Has Moderate Target UpsideSouthwest Airlines' $55 price target compares with a reported share price of $46.31. The target still implies upside, but the stock has already gained 12.1% year to date and 50.8% over the trailing 12 months.
After that move, execution matters more. Further appreciation likely depends on whether Southwest Airlines can sustain unit-revenue gains while managing fuel, retrofit costs and fleet-delivery risk.
LUV’s Liquidity Supports the TurnaroundSouthwest Airlines ended the second quarter with $5.3 billion of liquidity, including $3.8 billion in cash and cash equivalents. Gross leverage was 2.1 times, and first-half operating cash flow reached nearly $2 billion.
Capital allocation also supports flexibility. The company paid $181 million in dividends in the first half of 2026 and repurchased $1.25 billion of common stock in the first quarter, while management expects 2026 net capital spending near the low end of, or below, the prior $3.0-$3.5 billion range.
Southwest Airlines’ Rating Case Needs ConfirmationThe bottom line: Southwest Airlines has improved its earnings profile, but investors still need confirmation that the rebound can withstand fuel volatility, higher nonfuel costs and Boeing-related execution challenges.
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Its Value Score of A, Growth Score of A, Momentum Score of B and VGM Score of A indicate favorable estimate and style characteristics, but the remaining risk factors argue for selectivity rather than an unconditional chase after the rally.
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Southwest Airlines (LUV - Free Report) . LUV is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.
We also note that LUV holds a PEG ratio of 0.40. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LUV's PEG compares to its industry's average PEG of 0.48. Within the past year, LUV's PEG has been as high as 6.49 and as low as 0.39, with a median of 2.95.
Investors should also recognize that LUV has a P/B ratio of 2.13. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.91. LUV's P/B has been as high as 2.47 and as low as 1.46, with a median of 1.90, over the past year.
These are only a few of the key metrics included in Southwest Airlines's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, LUV looks like an impressive value stock at the moment.
Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all.
By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.
However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.
Our proprietary system currently recommends Southwest Airlines (LUV - Free Report) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.
Research shows that stocks carrying the best growth features consistently beat the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Here are three of the most important factors that make the stock of this airline a great growth pick right now.
Earnings GrowthArguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.
While the historical EPS growth rate for Southwest is 4.7%, investors should actually focus on the projected growth. The company's EPS is expected to grow 247.6% this year, crushing the industry average, which calls for EPS growth of -0.6%.
Impressive Asset Utilization RatioGrowth investors often overlook asset utilization ratio, also known as sales-to-total-assets (S/TA) ratio, but it is an important feature of a real growth stock. This metric shows how efficiently a firm is utilizing its assets to generate sales.
Right now, Southwest has an S/TA ratio of 1.03, which means that the company gets $1.03 in sales for each dollar in assets. Comparing this to the industry average of 0.72, it can be said that the company is more efficient.
In addition to efficiency in generating sales, sales growth plays an important role. And Southwest looks attractive from a sales growth perspective as well. The company's sales are expected to grow 16.9% this year versus the industry average of 9.1%.
Promising Earnings Estimate RevisionsSuperiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
There have been upward revisions in current-year earnings estimates for Southwest. The Zacks Consensus Estimate for the current year has surged 19.7% over the past month.
Bottom LineWhile the overall earnings estimate revisions have made Southwest a Zacks Rank #2 stock, it has earned itself a Growth Score of A based on a number of factors, including the ones discussed above.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
This combination indicates that Southwest is a potential outperformer and a solid choice for growth investors.
Elliott Investment Management L.P. cut its holdings in shares of Southwest Airlines Co. (NYSE:LUV – Free Report) by 40.6% during the 1st quarter, according to its most recent Form 13F filing with the SEC. The firm owned 30,346,000 shares of the airline’s stock after selling 20,782,500 shares during the period. Southwest Airlines accounts for 5.7% of Elliott Investment Management L.P.’s portfolio, making the stock its 4th biggest position. Elliott Investment Management L.P. owned approximately 6.21% of Southwest Airlines worth $1,140,099,000 as of its most recent SEC filing.
Other hedge funds and other institutional investors also recently made changes to their positions in the company. Franklin Resources Inc. increased its stake in Southwest Airlines by 7.0% during the fourth quarter. Franklin Resources Inc. now owns 40,200,530 shares of the airline’s stock worth $1,661,488,000 after acquiring an additional 2,626,853 shares during the last quarter. Invesco Ltd. lifted its stake in shares of Southwest Airlines by 9.2% in the 3rd quarter. Invesco Ltd. now owns 6,837,197 shares of the airline’s stock valued at $218,175,000 after purchasing an additional 577,326 shares during the last quarter. Morgan Stanley boosted its holdings in shares of Southwest Airlines by 4.1% in the 4th quarter. Morgan Stanley now owns 6,228,475 shares of the airline’s stock worth $257,423,000 after purchasing an additional 244,891 shares during the period. Dimensional Fund Advisors LP boosted its holdings in shares of Southwest Airlines by 2.1% in the 1st quarter. Dimensional Fund Advisors LP now owns 5,763,154 shares of the airline’s stock worth $216,472,000 after purchasing an additional 117,833 shares during the period. Finally, Norges Bank bought a new position in shares of Southwest Airlines during the 4th quarter valued at approximately $172,038,000. Institutional investors own 80.82% of the company’s stock.
Analyst Upgrades and Downgrades Several brokerages have recently weighed in on LUV. Citigroup reduced their target price on shares of Southwest Airlines from $55.00 to $50.00 and set a “neutral” rating on the stock in a research note on Friday. Wells Fargo & Company lifted their price target on shares of Southwest Airlines from $44.00 to $50.00 and gave the stock an “equal weight” rating in a research note on Tuesday, June 30th. Wall Street Zen upgraded shares of Southwest Airlines from a “hold” rating to a “buy” rating in a report on Sunday, July 5th. Jefferies Financial Group raised their price objective on shares of Southwest Airlines from $44.00 to $50.00 and gave the stock a “hold” rating in a research note on Wednesday, July 1st. Finally, Argus dropped their target price on Southwest Airlines from $55.00 to $45.00 and set a “buy” rating for the company in a research report on Friday, April 24th. Nine investment analysts have rated the stock with a Buy rating, nine have issued a Hold rating and four have issued a Sell rating to the stock. Based on data from MarketBeat.com, the stock currently has an average rating of “Hold” and an average price target of $49.55.
Get Our Latest Report on Southwest Airlines
Southwest Airlines Stock Up 0.6% LUV opened at $45.36 on Tuesday. The company has a fifty day moving average of $46.16 and a two-hundred day moving average of $44.32. The stock has a market capitalization of $22.17 billion, a price-to-earnings ratio of 27.83, a PEG ratio of 0.38 and a beta of 1.12. Southwest Airlines Co. has a fifty-two week low of $28.98 and a fifty-two week high of $55.11. The company has a debt-to-equity ratio of 0.54, a quick ratio of 0.42 and a current ratio of 0.49.
Southwest Airlines (NYSE:LUV – Get Free Report) last posted its earnings results on Wednesday, July 22nd. The airline reported $0.94 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.52 by $0.42. Southwest Airlines had a net margin of 2.78% and a return on equity of 14.15%. The business had revenue of $8.72 billion for the quarter, compared to analyst estimates of $8.58 billion. During the same period in the prior year, the company posted $0.43 EPS. The company’s revenue for the quarter was up 16.4% on a year-over-year basis. Southwest Airlines has set its FY 2026 guidance at 3.250-4.250 EPS and its Q3 2026 guidance at 0.500-0.750 EPS. On average, research analysts expect that Southwest Airlines Co. will post 3.59 earnings per share for the current year.
Southwest Airlines Dividend Announcement The firm also recently declared a quarterly dividend, which was paid on Thursday, July 2nd. Shareholders of record on Thursday, June 11th were given a dividend of $0.18 per share. The ex-dividend date was Thursday, June 11th. This represents a $0.72 dividend on an annualized basis and a yield of 1.6%. Southwest Airlines’s dividend payout ratio is currently 44.17%.
Southwest Airlines Profile (Free Report)
Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest’s operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.
Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.
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Arrowstreet Capital Limited Partnership reduced its holdings in shares of Southwest Airlines Co. (NYSE:LUV – Free Report) by 37.6% during the 1st quarter, according to the company in its most recent 13F filing with the SEC. The institutional investor owned 4,858,283 shares of the airline’s stock after selling 2,932,884 shares during the period. Arrowstreet Capital Limited Partnership owned about 0.99% of Southwest Airlines worth $182,526,000 at the end of the most recent reporting period.
A number of other hedge funds have also modified their holdings of LUV. SHP Wealth Management acquired a new stake in shares of Southwest Airlines during the fourth quarter worth approximately $25,000. GHP Investment Advisors Inc. acquired a new position in Southwest Airlines in the fourth quarter valued at approximately $26,000. Entrust Financial LLC acquired a new position in Southwest Airlines in the fourth quarter valued at approximately $26,000. Los Angeles Capital Management LLC bought a new position in Southwest Airlines in the fourth quarter valued at approximately $26,000. Finally, Optima Capital LLC bought a new position in Southwest Airlines in the fourth quarter valued at approximately $27,000. 80.82% of the stock is owned by institutional investors and hedge funds.
Analyst Upgrades and Downgrades Several analysts have commented on the stock. JPMorgan Chase & Co. dropped their target price on shares of Southwest Airlines from $60.00 to $59.00 and set an “overweight” rating for the company in a research report on Friday. Jefferies Financial Group lifted their price objective on Southwest Airlines from $44.00 to $50.00 and gave the stock a “hold” rating in a research note on Wednesday, July 1st. Wells Fargo & Company upped their price objective on Southwest Airlines from $44.00 to $50.00 and gave the company an “equal weight” rating in a report on Tuesday, June 30th. Evercore increased their target price on Southwest Airlines from $44.00 to $52.00 in a research note on Thursday, June 25th. Finally, TD Cowen raised their target price on Southwest Airlines from $47.00 to $53.00 and gave the stock a “buy” rating in a report on Thursday, July 2nd. Nine research analysts have rated the stock with a Buy rating, nine have given a Hold rating and four have assigned a Sell rating to the company. According to data from MarketBeat.com, Southwest Airlines has an average rating of “Hold” and a consensus target price of $49.55.
Read Our Latest Stock Report on LUV
Key Headlines Impacting Southwest Airlines Here are the key news stories impacting Southwest Airlines this week:
Positive Sentiment: BMO Capital Markets raised its price target on Southwest Airlines to $60 from $58.50 and reiterated an outperform rating, signaling confidence in further upside after the company’s earnings beat. Benzinga report Positive Sentiment: Barclays kept a buy rating on Southwest Airlines, reinforcing the bullish view from analysts following the airline’s latest quarter. Barclays article Positive Sentiment: Southwest reported second-quarter adjusted EPS of $0.94, well above estimates, and record quarterly revenue, showing improved earnings power and solid demand. Yahoo Finance report Positive Sentiment: Several earnings recaps highlighted stronger fares, commercial gains, and margin expansion, suggesting the company’s transformation efforts are starting to show through in results. Zacks report Southwest Airlines Stock Performance Shares of LUV stock opened at $45.19 on Friday. Southwest Airlines Co. has a 12 month low of $28.98 and a 12 month high of $55.11. The company’s fifty day simple moving average is $46.01 and its 200-day simple moving average is $44.29. The firm has a market cap of $22.09 billion, a PE ratio of 27.72, a P/E/G ratio of 0.37 and a beta of 1.12. The company has a quick ratio of 0.41, a current ratio of 0.49 and a debt-to-equity ratio of 0.54.
Southwest Airlines (NYSE:LUV – Get Free Report) last released its earnings results on Wednesday, July 22nd. The airline reported $0.94 earnings per share for the quarter, beating analysts’ consensus estimates of $0.52 by $0.42. Southwest Airlines had a net margin of 2.78% and a return on equity of 14.15%. The business had revenue of $8.72 billion during the quarter, compared to the consensus estimate of $8.58 billion. During the same quarter last year, the firm earned $0.43 earnings per share. The firm’s revenue for the quarter was up 16.4% compared to the same quarter last year. Southwest Airlines has set its FY 2026 guidance at 3.250-4.250 EPS and its Q3 2026 guidance at 0.500-0.750 EPS. Equities research analysts expect that Southwest Airlines Co. will post 3.67 EPS for the current fiscal year.
Southwest Airlines Dividend Announcement The business also recently disclosed a quarterly dividend, which was paid on Thursday, July 2nd. Stockholders of record on Thursday, June 11th were issued a $0.18 dividend. The ex-dividend date was Thursday, June 11th. This represents a $0.72 annualized dividend and a dividend yield of 1.6%. Southwest Airlines’s dividend payout ratio (DPR) is presently 44.17%.
Southwest Airlines Company Profile (Free Report)
Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest’s operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.
Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.
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Paul Singer’s Elliott Investment Management just handed retail investors a cheat sheet. The latest 13F filing, disclosing holdings as of March 31, 2026, reveals five US-listed long positions that stretch from precious metals royalties to AI infrastructure. One of them has already returned 90.1% since the filing date. The other four are still setting up. Here is where the money is moving, and whether you can still get in.
1. Triple Flag Precious Metals (TFPM): The Surprise Pick A gold streamer is rare territory for Elliott, and that is exactly why Triple Flag Precious Metals (NYSE:TFPM) belongs at the top of the list. The $6.43B royalty and streaming name is a pure play on gold at a time when the metal is repricing every commodity cycle assumption, and the stock has drifted lower even as its fundamentals have exploded.
Q1 FY26 landed with adjusted EPS of $0.45 against a $0.42 estimate, revenue of $146.99M up 78.7% year over year, and a realized gold price of $4,873 per ounce versus $2,860 a year earlier. Gross margin expanded to 72% and net income jumped 156.87% on record 30,166 GEOs sold. Our model pegs base case fair value at $35.95, a 31.73% upside from the $27.29 current price, with 73% of analysts bullish and zero bears. Screens as a Buy.
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The stock has fallen 21.6% since the 13F reference date of March 31, 2026. Elliott’s paper P&L on TFPM is underwater at current prices. Next up is a name where Singer’s paper is already very much in the black.
2. Suncor Energy (SU): The Cash Machine Masquerading as a Miss Suncor Energy (NYSE:SU | SU Price Prediction) is the integrated oil sands and refining giant that headline-scanning traders punished on a Q1 EPS miss and then quietly bought back. This is Elliott territory: a business printing cash while traders debate the wrong number.
Q1 FY26 EPS came in at $1.36 versus a $1.93 estimate, but adjusted operating earnings actually rose to $1.62B from $1.15B, and free cash flow surged 188.13% year over year to $2.05B. Management responded by lifting the monthly buyback pace from $275M to $350M, targeting nearly $4 billion in 2026 repurchases, over 30% higher than 2025. Our model reads Suncor as near fair value with 0.25% upside to a $62.02 base case. Screens as a Hold, but one that is paying shareholders to wait.
Elliott’s paper is up modestly here, with SU still down 7.61% from the March 31 filing reference even after a 60.35% one-year run. If Suncor is the boring compounder, the next name is the opposite: the one where the market has already sprinted past the activist thesis.
3. Phillips 66 (PSX): The Activist Heavyweight Running Hot This is the obvious one. Phillips 66 (NYSE:PSX) is the flagship of Elliott’s current activist book, with the fund publicly pushing for a midstream separation. Refining margins are back, buybacks are flowing, and the crowd has piled in.
Q1 FY26 delivered adjusted EPS of $0.49 against a -$0.39 estimate, revenue of $33.00B up 8.2%, and refining margins of $10.11 per barrel versus $6.81 a year earlier. Buybacks hit $269M in Q1 and the annualized dividend was raised 7% to $1.265. The problem: the stock has ripped to $206.33, above the $198.44 analyst target, and our base case models a 20.27% drawdown to $164.52 over the next year. All three of our scenarios, bull, base, and bear, produce negative to flat one-year returns. Screens as a Sell into strength based on our modeled downside.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Phillips 66 didn't make the cut. Grab the names FREE today.
Elliott is sitting on gains of 11.29% since March 31 and 68.37% over one year. The activist thesis worked. The trade has aged. And the next name on Singer’s list has an even longer activist history behind it.
4. Southwest Airlines (LUV): The Turnaround Elliott Built Southwest Airlines (NYSE:LUV) is the case study for what Elliott activism produces. The fund reshaped the board, drove the commercial overhaul, and the Q1 numbers now show the model working, if fuel cooperates.
Q1 FY26 posted EPS of $0.45 versus $0.4739 consensus, revenue of $7.249B up 12.8%, and net income of $227M against a $149M loss a year earlier. RASM grew 11.2% YoY, roughly 60% of customers bought up to assigned or extra legroom seats, and Rapid Rewards enrollments jumped 37%. CEO Bob Jordan called it a “turning point for Southwest,” even as Q2 fuel guidance leapt to $4.10 to $4.15 per gallon. Our model puts fair value at $49.99, only 4.48% above the $47.85 current price. Screens as a Hold. The easy money on the activist trade has already been made.
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LUV has already surged 32.1% since the March 31 filing reference. But the biggest Elliott win, and the punchline of this list, is not in the sky.
5. Hewlett Packard Enterprise (HPE): The Payoff Elliott’s Chris Hsu now sits on the board of Hewlett Packard Enterprise (NYSE:HPE), confirming the activist stake and giving Singer a seat at the table for what has already become the trade of 2026. The Juniper Networks integration turned a legacy enterprise IT name into an AI infrastructure operator.
Q2 FY26 (reported June 1, 2026) obliterated guidance. Non-GAAP EPS came in at $0.79 against a $0.51 to $0.55 range, revenue was $10.68 billion up 40%, and Networking revenue exploded 148.2% to $2.69 billion. Free cash flow hit $915 million, non-GAAP operating margin expanded to 13.3% from 8.0%, and management hiked full-year non-GAAP EPS guidance to $3.35 to $3.45, up from a prior $2.30 to $2.50 range. CEO Antonio Neri framed it plainly: “HPE delivered an exceptional quarter with record-breaking revenue, higher-than-anticipated profitability, and increased free cash flow.”
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The stock is up 90.1% since March 31, 2026 and 126.21% over one year. Yet our model still flags 16.09% base case upside to $53.31, the analyst target sits at $64.13, and composite sentiment reads bullish at 69.26. Screens as a Buy, and Elliott’s involvement is far from finished.
The Takeaway Singer’s five-name book is a spectrum, not a basket. HPE and TFPM screen as buys with real modeled upside. Phillips 66 has run past the activist thesis and now screens as a sell. Suncor and Southwest are compounders that already delivered the easy dollars. If you are trailing Elliott into these names, the sequence matters more than the ticker list. The window on the two still-open trades is not going to stay open forever.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Phillips 66 didn't make the cut. Grab the names FREE today.
MarketBeat Week in Review – 07/06 - 07/10Southwest Airlines NYSE: LUV reported sharply higher second-quarter 2026 earnings and record revenue, with executives saying the carrier’s recent commercial transformation contributed across the full quarter for the first time.
President and Chief Executive Officer Bob Jordan said the quarter showed “the earnings power of our business” and demonstrated that Southwest now has “a broader and more diversified set of revenue and commercial levers than at any point in our history.”
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Southwest MAX Incident Revives Headline Risk for Boeing and Airline StocksThe airline reported adjusted earnings per share of $0.94, up approximately 120% from a year earlier and above both its initial guidance and analyst consensus, according to Jordan. Adjusted operating margin was 6.7%, a 3.3-point improvement year over year, while after-tax return on invested capital was 9%.
Southwest said adjusted operating revenue rose 20.3% on capacity growth of just 0.2%, reaching a quarterly record of $8.7 billion. Adjusted unit revenue increased 20.1% year over year, also reaching what Jordan described as an all-time quarterly record and exceeding the high end of the company’s prior guidance range.
Revenue Initiatives Drive Record Results These 3 Stocks Lowered Their Share Counts Drastically in Q1Jordan and Chief Commercial Officer Justin Jones attributed the revenue gains to a mix of new and expanded initiatives, including product changes, bag fees, online travel agencies, change-related revenue and strength in the core business.
Managed business revenue rose 30% year over year to a new quarterly record, surpassing the prior record set in the first quarter. Jordan said customer engagement also improved, with Rapid Rewards new member enrollments up 35% year over year and the program approaching nearly 100 million members. Tier qualification activity reached a record high, while Chase co-branded credit card acquisitions increased 28% from a year earlier.
Jones said the company is focused on building a “more productive commercial business” that balances unit revenue growth, disciplined capacity, network profitability and long-term customer engagement. He said corporate customers have shown strong adoption of the company’s new products, with growth visible across fares, load factor and share of origin-and-destination mix.
In response to analyst questions about the impact of lapping initiatives introduced in 2025, Jordan said third-quarter comparisons will face a headwind from those actions, including bag fees, which he said represent about $1 billion annually. He said that excluding the impact of those comparisons, Southwest’s third-quarter unit revenue guidance would be ahead of the second-quarter result.
Guidance Updated as Fuel Costs Remain Elevated Southwest now expects full-year 2026 adjusted earnings per share of $3.25 to $4.25. Jordan said the updated range replaces the company’s prior expectation of at least $4 per share and reflects the forward fuel curve as of July 17, while assuming the current fare environment and demand trends remain broadly intact.
Jordan said the company faced an estimated year-to-date fuel headwind of approximately $1.33 per share but remains positioned to generate earnings broadly in line with the guidance it issued at the start of the year. Second-quarter fuel expense increased nearly $900 million year over year, and fuel averaged $3.92 per gallon during the quarter.
Chief Financial Officer Tom Doxey said Southwest generated $500 million of operating cash flow in the quarter, up more than 32% year over year, and nearly $2 billion in operating cash flow during the first half. The company ended the quarter with $5.3 billion in liquidity, above its target of approximately $4.5 billion. Its gross leverage ratio was 2.1 times, within its stated range of 1 to 2.5 times and improved from 2.4 times at the end of 2025.
For the third quarter, Southwest expects unit revenue to rise 17.5% to 19.5% year over year. The company expects CASM-X, or unit costs excluding fuel and special items, to increase 3.5% to 4% year over year on capacity that is flat to down 1%.
Cost Discipline and Fleet Actions Support Margins Doxey said cost savings are being generated across the business, including technology, supply chain, maintenance and labor productivity. He said management has identified “hundreds of millions of dollars of incremental savings” since the start of the year, and those savings are incorporated into the full-year outlook.
Second-quarter CASM increased 3.4% year over year on near-flat capacity, below the low end of prior guidance, Jordan said. Doxey also discussed gains from aircraft sales, saying Southwest views divestment of retiring assets as a durable strength. He said the company has more than 450 NG aircraft that will be retired over many years, and that gains on sales may be “a little lumpy by quarter” but should continue over time.
Asked about capital spending and free cash flow, Doxey said operating cash flow should improve as underlying profitability improves, while the conversion to free cash flow will depend largely on the timing of aircraft deliveries. He said Southwest generally pays cash or uses unsecured or secured financing for aircraft, rather than relying on leasing structures that would reduce net capital expenditures.
Operations, Network and Product Enhancements Chief Operating Officer Andrew Watterson said Southwest ranked first among large domestic carriers in completion factor during the quarter and improved its mishandled baggage performance year over year, despite higher volumes of gate-checked bags. He said trip net promoter score improved throughout the quarter and that Southwest maintained the lowest customer complaint rate among major U.S. airlines.
Watterson acknowledged that on-time performance has declined in some areas, particularly during day-to-day “small-scale events” tied to high load factors and turn times. He said the company is focused on improving the last 10 minutes of aircraft turns and has already seen some benefits in July, with additional schedule changes expected in October.
Southwest also highlighted several product and network updates. Jordan said the airline’s first Starlink-equipped aircraft entered service a few weeks before the call, beginning a new phase of in-flight connectivity. The company also expanded its airline partner network to nine carriers with the addition of Air Premia and completed the rollout of service to five previously announced new destinations with the launch of Anchorage in May.
Jones said future capacity growth will be modest and focused on Southwest’s “points of strength,” including markets where it already has leading positions. He said the airline is not prepared to provide full-year 2027 capacity guidance but will continue to emphasize capacity discipline and profitable deployment of aircraft.
Management Emphasizes Durability of Demand Throughout the call, executives said demand and pricing remain strong. Jordan said industry recapture of higher fuel costs has been swift and pricing has remained sticky. He also said the revenue strength is not only related to fuel recovery, but reflects benefits from Southwest’s own initiatives.
Jones said the third quarter was about 65% booked at the time of the call, with yields running up 24% year over year compared with 13% for the second quarter at the same point. “There is no deceleration in the strength in the demand, no deceleration in the strength in the revenues and the fares,” he said.
Jordan said he remains optimistic about consumer demand for travel and the long-term durability of Southwest’s revenue base. He pointed to growth in managed business revenue, Rapid Rewards memberships, card acquisitions and customer engagement as evidence that the company’s changes are resonating.
Southwest also accrued more than $100 million year to date in profit sharing for employees. Jordan thanked employees and said the results show “proof in the earnings” that the company’s transformation is working.
About Southwest Airlines (NYSE:LUV)Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest's operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.
Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.
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Southwest Airlines hired a ship this spring to send jet fuel from Texas to California, where prices are much higher and concerns had grown about supply, Chief Financial Officer Tom Doxey told CNBC. It was a first for the Dallas airline.
"It brought like a week's supply to the West Coast at a time when when supply was most constricted ... when it was most at risk," Doxey said.
The ship, which left from Houston and went through the Panama Canal, arrived May 28 in Los Angeles and had about 12.6 million gallons aboard, Southwest said. For context, Southwest used 564 million gallons of jet fuel in the last quarter.
The West Coast is much more reliant on imports than other parts of the country. Jet fuel prices spiked and have been volatile since the U.S. and Israel struck Iran in February.
Southwest said Thursday that its fuel expenses were up nearly $900 million in the second quarter from last year.
For the shipment to California, the airline said it used a waiver of the Jones Act, a law from 1920 that requires shipments between U.S. ports to be carried on a U.S. ship. President Donald Trump waived that requirement in March as fuel prices were soaring in the weeks following the start of the Iran war and subsequent shipping snarls erupted in the Strait of Hormuz, a key channel.
Worries about supplies intensified as countries restricted exports this year, fearful of running low on fuel. Those concerns have since eased, a Southwest spokesman said.
Jet fuel is airlines' biggest expense after labor. Prices eased in late spring and early summer but rose again as tensions reignited with Iran this month.
Last week, United Airlines, which flies more internationally than any other U.S. carrier, said it is using the latest available fuel prices for its quarterly estimates because prices have been so volatile.
In its July 15 report, it said jet fuel increased $575 million, or a $1.12 hit to adjusted earnings per share, for the third quarter alone.
U.S. airlines have abandoned fuel hedges, which help them lock in costs through futures contracts, over the past decade or so as the U.S. was awash in supply, keeping a lid on prices.
This time around, carriers have scaled back their capacity growth plans, which is also helping boost fares. Airline executives this month said demand remains strong despite higher fares, which they say are likely to stick.
Read more CNBC airline newsDelta launches ‘basic business’ fares without lounge access, seat selectionRecord heat, crowds drive offseason boom in international travelDelta expects higher airfare to last, bringing 2026 profit goal in reach'Bring 'em on': Delta wants United's crown over the Pacific, tooSpirit's collapse, high fuel prices test limits of summer vacation spendingMeet the pilots flying Spirit Airlines' yellow jets to the desert
Southwest Airlines (LUV - Free Report) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.
The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.
The power of a changing earnings picture in determining near-term stock price movements makes the Zacks rating system highly useful for individual investors, since it can be difficult to make decisions based on rating upgrades by Wall Street analysts. These are mostly driven by subjective factors that are hard to see and measure in real time.
Therefore, the Zacks rating upgrade for Southwest basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.
Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Southwest imply an improvement in the company's underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.
Harnessing the Power of Earnings Estimate RevisionsEmpirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .
Earnings Estimate Revisions for SouthwestThis airline is expected to earn $3.23 per share for the fiscal year ending December 2026, which represents no year-over-year change.
Analysts have been steadily raising their estimates for Southwest. Over the past three months, the Zacks Consensus Estimate for the company has increased 10.5%.
Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
The upgrade of Southwest to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
Key Takeaways Southwest Airlines' Q2 adjusted EPS rose 118.6% and beat estimates by 80.8% on record revenue.Average fares climbed 20.9% as managed business revenue hit a record and unit revenue jumped 20.1%.LUV sees Q3 EPS of 50-75 cents, with unit revenue up 17.5-19.5% and capacity down 1% to flat. Southwest Airlines Co. (LUV - Free Report) reported second-quarter 2026 adjusted earnings of 94 cents per share, up 118.6% year over year and 80.8% above the Zacks Consensus Estimate of 52 cents. Record operating revenues of $8.43 billion rose 16.4% but missed the consensus mark of $8.58 billion by 1.7%.
Results benefited from demand for enhanced products, record managed business revenues and cost discipline despite an $889 million increase in fuel expense. Adjusted unit revenues jumped 20.1%, while adjusted operating margin expanded 3.3 points to 6.7%.
LUV's Passenger Revenues Power Top-Line GrowthPassenger revenues, which accounted for 91.9% of the top line, increased 16.9% year over year to $7.75 billion. The improvement reflected higher fares and strong customer response to Southwest Airlines’ expanded commercial offerings.
Freight revenues rose 13.6% to $50 million. Other operating revenues increased 11.2% to $637 million, providing another source of growth beyond ticket sales.
Southwest Airlines Posts Stronger Revenue ProductivityRevenue passenger miles, a measure of traffic, increased 1.2% year over year to 37.35 billion. Capacity, measured in available seat miles, edged up only 0.2% to 47.09 billion, allowing demand growth to outpace supply.
The load factor improved 0.8 percentage points to 79.3%. Average passenger fare climbed 20.9% to $225.61, while passenger revenue per available seat mile advanced 16.7% to 16.45 cents. Revenue passengers carried declined 3.3% to 34.3 million.
LUV Controls Non-Fuel Costs as Fuel Expense SurgesTotal operating expenses increased 16.1% year over year to $8.15 billion. Aircraft fuel and related taxes surged 67% to $2.22 billion, representing the largest cost headwind during the quarter.
Fuel cost per gallon increased 69% to $3.92. Still, cost per available seat mile, excluding fuel, special items and profit sharing, rose a more moderate 3.4% to 12.45 cents, coming in below the company’s prior guidance.
Adjusted operating income climbed 138.8% to $585 million. Reported operating income increased 26.7% to $285 million despite the sharp rise in fuel costs.
Southwest Airlines' Commercial Initiatives Gain TractionManaged business revenues reached a quarterly record and increased 30% year over year. The performance highlighted stronger demand from corporate customers and broadened the company’s revenue mix.
Rapid Rewards enrollment rose 35%, while the loyalty program reached nearly 100 million members and posted record tier qualifiers. Acquisitions for the Chase co-branded credit card accelerated 28%, with double-digit growth in every month of the quarter.
Southwest Airlines also completed service rollouts to five new destinations and added Air Premia as its ninth airline partner. The carrier operated its first aircraft equipped with Starlink connectivity during the quarter.
LUV Generates Higher Operating Cash FlowSouthwest Airlines ended June with cash and cash equivalents of $3.79 billion, up from $3.23 billion at the end of 2025. Total liquidity was $5.3 billion, including a $1.5 billion revolving credit facility.
Net cash provided by operating activities rose to $530 million from $401 million a year earlier. Capital expenditures totaled $818 million, while proceeds from property and equipment sales reached $258 million.
The company paid $88 million in dividends during the quarter. It ended the period with $3.79 billion of long-term debt, excluding current maturities, and reported gross leverage of 2.1 times.
Southwest Airlines Issues Q3 and 2026 GuidanceFor third-quarter 2026, Southwest Airlines expects adjusted earnings of 50-75 cents per share. The Zacks Consensus Estimate is pegged at 77 cents per share. Capacity is projected to decline 1% to remain flat, while unit revenues are forecasted to increase 17.5-19.5% year over year.
Third-quarter cost per available seat mile, excluding fuel, special items and profit sharing, is expected to rise 3.5-4%. Fuel cost per gallon is projected to be between $3.70 and $3.75.
For 2026, management expects adjusted earnings of $3.25-$4.25 per share, replacing its prior expectation of at least $4. The Zacks Consensus Estimate is currently pegged at $3.23. Capacity growth is now forecasted to be roughly 1.5%, down from 2%. Net capital spending is expected near the low end of, or below, the previously announced $3-$3.5 billion range.
Currently, LUV carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q2 Performances of Other Transportation CompaniesDelta Air Lines (DAL - Free Report) reported second-quarter 2026 earnings (excluding 88 cents from non-recurring items) of $1.56 per share, beating the Zacks Consensus Estimate of $1.51. Earnings declined in double digits (% wise) from a year ago as sharply higher fuel costs pressured profitability.
Revenues rose on a year-over-year basis to $17.67 billion but missed the consensus estimate of $17.76 billion. Broad demand strength lifted adjusted total revenue per available seat mile, or TRASM, 12.4%, while premium and diversified revenue streams continued to expand.
United Airlines Holdings, Inc. (UAL - Free Report) reported second-quarter 2026 adjusted earnings of $1.99 per share, down 48.6% year over year but above the Zacks Consensus Estimate of $1.92 by 3.7%.
Operating revenues rose 16% to $17.67 billion and were essentially in line with the $17.68-billion consensus mark. A 12.1% increase in total revenue per available seat mile, or TRASM, and broad-based gains across premium, loyalty and cargo revenues supported the top line despite sharply higher fuel costs.
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported second-quarter 2026 earnings of $1.91 per share, up 45.8% from $1.31 a year ago. The figure beat the Zacks Consensus Estimate of $1.71 by 11.7%.
Operating revenues climbed 19.4% year over year to $3.50 billion and surpassed the consensus mark of $3.19 billion by 9.5%. Higher volumes and pricing across several businesses supported growth, led by a 10% increase in Intermodal loads.
Southwest Airlines Co (NYSE:LUV) shares fell about 5% in early trading Thursday after the airline reported stronger-than-expected second-quarter results but issued a third-quarter earnings outlook that fell below Wall Street expectations.
The company reported adjusted earnings per share of $0.94 for the second quarter, ahead of consensus estimates of $0.51.
Revenue also topped expectations, with adjusted operating revenue reaching a record $8.7 billion, up 20.3% year over year, compared with analyst estimates of $8.58 billion.
Managed business revenues reached an all-time quarterly record, rising 30% year over year. The company’s Rapid Rewards loyalty program also reached its largest size ever at nearly 100 million members, with new enrollments increasing 35% year over year and record numbers of tier qualifiers.
“Second quarter results demonstrate the earnings power of our business. We delivered results well ahead of consensus expectations despite nearly $900 million of additional fuel expense year-over-year,” Southwest CEO Bob Jordan said in a statement.
Despite the stronger-than-expected quarterly performance, investors focused on Southwest’s forward outlook.
The airline guided for third quarter adjusted earnings per share of $0.50 to $0.75, while lowering its full-year 2026 adjusted EPS outlook to a range of $3.25 to $4.25 from its previous expectation of at least $4.
For the third quarter, Southwest expects revenue per available seat mile to increase between 17.5% and 19.5% year over year, while capacity is expected to range from a 1% decline to flat growth. The company expects adjusted cost per available seat mile excluding fuel to increase 3.5% to 4.0% year over year.
Southwest attributed the updated forecast to higher fuel costs and broader uncertainty. Fuel expenses increased by $889 million year over year in the second quarter, creating a $1.17 per share headwind to adjusted earnings.
Southwest Airlines Co (NYSE:LUV) shares fell about 5% in early trading Thursday after the airline reported stronger-than-expected second-quarter results but issued a third-quarter earnings outlook that fell below Wall Street expectations.
The company reported adjusted earnings per share of $0.94 for the second quarter, ahead of consensus estimates of $0.51.
Revenue also topped expectations, with adjusted operating revenue reaching a record $8.7 billion, up 20.3% year over year, compared with analyst estimates of $8.58 billion.
Managed business revenues reached an all-time quarterly record, rising 30% year over year. The company’s Rapid Rewards loyalty program also reached its largest size ever at nearly 100 million members, with new enrollments increasing 35% year over year and record numbers of tier qualifiers.
“Second quarter results demonstrate the earnings power of our business. We delivered results well ahead of consensus expectations despite nearly $900 million of additional fuel expense year-over-year,” Southwest CEO Bob Jordan said in a statement.
Despite the stronger-than-expected quarterly performance, investors focused on Southwest’s forward outlook.
The airline guided for third quarter adjusted earnings per share of $0.50 to $0.75, while lowering its full-year 2026 adjusted EPS outlook to a range of $3.25 to $4.25 from its previous expectation of at least $4.
For the third quarter, Southwest expects revenue per available seat mile to increase between 17.5% and 19.5% year over year, while capacity is expected to range from a 1% decline to flat growth. The company expects adjusted cost per available seat mile excluding fuel to increase 3.5% to 4.0% year over year.
Southwest attributed the updated forecast to higher fuel costs and broader uncertainty. Fuel expenses increased by $889 million year over year in the second quarter, creating a $1.17 per share headwind to adjusted earnings.
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is LATAM Airlines Group (LTM - Free Report) . LTM is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.88. This compares to its industry's average Forward P/E of 10.58. Over the past year, LTM's Forward P/E has been as high as 9.75 and as low as 6.73, with a median of 8.47.
Investors will also notice that LTM has a PEG ratio of 0.40. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LTM's industry currently sports an average PEG of 0.48. Within the past year, LTM's PEG has been as high as 0.85 and as low as 0.37, with a median of 0.57.
Investors could also keep in mind Southwest Airlines (LUV - Free Report) , another Transportation - Airline stock with a Zacks Rank of #2 (Buy) and Value grade of A.
Shares of Southwest Airlines are currently trading at a forward earnings multiple of 15.65 and a PEG ratio of 0.40 compared to its industry's P/E and PEG ratios of 10.58 and 0.48, respectively.
LUV's Forward P/E has been as high as 43.19 and as low as 12.29, with a median of 18.66. During the same time period, its PEG ratio has been as high as 6.49, as low as 0.39, with a median of 2.95.
Southwest Airlines sports a P/B ratio of 2.13 as well; this compares to its industry's price-to-book ratio of 3.06. In the past 52 weeks, LUV's P/B has been as high as 2.47, as low as 1.46, with a median of 1.90.
These are just a handful of the figures considered in LATAM Airlines Group and Southwest Airlines's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that LTM and LUV is an impressive value stock right now.
Southwest Airlines stock is trending lower. What’s pulling LUV shares down? Southwest Airlines Q2 Highlights Q2 Revenue: $8.43 billion, versus estimates of $8.58 billion Q1 Adjusted EPS: 94 cents, versus estimates of 51 cents Second-quarter operating revenue increased 16.4% year-over-year. The company said revenue per available seat mile (RASM) increased 16.2% year-over-year. RASM in the third quarter is expected to grow between 17.5% and 19.5%.
“Second quarter results demonstrate the earnings power of our business. We delivered results well ahead of consensus expectations despite nearly $900 million of additional fuel expense year-over-year,” said Bob Jordan, president and CEO of Southwest Airlines.
Southwest exited the quarter with $5.3 billion of liquidity, consisting of $3.8 billion in cash and cash equivalents and a revolving credit line of $1.5 billion.
The company guided for third-quarter adjusted earnings of 50 cents to 75 cents per share versus estimates of 82 cents per share. Southwest also sees full-year 2026 adjusted earnings in the range of $3.25 to $4.25 per share versus estimates of $3.17 per share.
“Our focus now turns to unlocking the company’s full earnings potential by continuing to optimize our network, product offering, and pricing, while continuing to strengthen financial performance,” Jordan added.
Southwest executives will discuss the quarter on an earnings call at 10 a.m. ET Thursday morning.
LUV Shares Slide After the CloseLUV Price Action: Southwest Airlines shares were down 2.06% in after-hours Wednesday, trading at $46.66 at the time of publication, according to Benzinga Pro.
Photo: Courtesy of Southwest Airlines.
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Southwest Airlines (LUV - Free Report) came out with quarterly earnings of $0.94 per share, beating the Zacks Consensus Estimate of $0.52 per share. This compares to earnings of $0.43 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +80.77%. A quarter ago, it was expected that this airline would post earnings of $0.45 per share when it actually produced earnings of $0.45, delivering no surprise.
Over the last four quarters, the company has surpassed consensus EPS estimates three times.
Southwest, which belongs to the Zacks Transportation - Airline industry, posted revenues of $8.43 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.68%. This compares to year-ago revenues of $7.24 billion. The company has topped consensus revenue estimates just once over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Southwest shares have added about 17.8% since the beginning of the year versus the S&P 500's gain of 9.7%.
What's Next for Southwest?While Southwest has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Southwest was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.77 on $8.19 billion in revenues for the coming quarter and $3.23 on $32.75 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Transportation - Airline is currently in the top 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Another stock from the same industry, Air Canada (ACDVF - Free Report) , has yet to report results for the quarter ended June 2026.
This company is expected to post quarterly earnings of $0.05 per share in its upcoming report, which represents a year-over-year change of -88.4%. The consensus EPS estimate for the quarter has been revised 18.5% higher over the last 30 days to the current level.
Air Canada's revenues are expected to be $4.43 billion, up 8.8% from the year-ago quarter.
For the quarter ended June 2026, Southwest Airlines (LUV - Free Report) reported revenue of $8.43 billion, up 16.4% over the same period last year. EPS came in at $0.94, compared to $0.43 in the year-ago quarter.
The reported revenue represents a surprise of -1.68% over the Zacks Consensus Estimate of $8.58 billion. With the consensus EPS estimate being $0.52, the EPS surprise was +80.77%.
While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.
As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.
Here is how Southwest performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
Load factor: 79.3% compared to the 81.4% average estimate based on five analysts.Passenger revenue per ASM (PRASM): 16.45 cents versus 16.65 cents estimated by four analysts on average.Available seat miles (ASMs): 47.09 billion versus the four-analyst average estimate of 47.11 billion.Revenue passenger miles (RPMs): 37.35 billion versus 38.5 billion estimated by four analysts on average.CASM, excluding Fuel and oil expense, special items, and profit sharing expense: 12.45 cents versus the four-analyst average estimate of 12.51 cents.Revenue Per Available Seat Mile (RASM): 17.91 cents compared to the 18.19 cents average estimate based on four analysts.Passenger revenue yield per RPM: 20.74 cents versus the three-analyst average estimate of 20.23 cents.CASM, excluding Fuel and oil expense and special items: 12.56 cents compared to the 12.68 cents average estimate based on three analysts.Fuel costs per gallon, including fuel tax: 3.92 $/gal compared to the 3.64 $/gal average estimate based on three analysts.Operating Revenues- Passenger [$M]: $7.75 billion compared to the $7.88 billion average estimate based on five analysts. The reported number represents a change of +16.9% year over year.Operating Revenues- Other: $637 million versus the five-analyst average estimate of $661.19 million. The reported number represents a year-over-year change of +11.2%.Operating Revenues- Freight [$M]: $50 million versus $51.87 million estimated by five analysts on average. Compared to the year-ago quarter, this number represents a +13.6% change.View all Key Company Metrics for Southwest here>>>
Shares of Southwest have returned -1.5% over the past month versus the Zacks S&P 500 composite's +0.3% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.
Strong year-over-year margin expansion despite fuel expense up nearly $900 million
All-time record operating and managed business revenues
Record Rapid Rewards membership and tier qualifiers
Expect full-year adjusted earnings per share1,2of $3.25 to $4.25
, /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) today reported second quarter 2026 financial results, marking the first full quarter with all transformational initiatives in place. Results reflected record revenue performance, significant earnings growth and margin expansion, broad demand strength, continued cost discipline, and strong Customer engagement with the Company's enhanced product offering.
"Second quarter results demonstrate the earnings power of our business. We delivered results well ahead of consensus expectations despite nearly $900 million of additional fuel expense year-over-year.
"Our business model now benefits from a broader and more diversified set of revenue and commercial levers than at any point in our history. Momentum across managed business, Rapid Rewards, and our Chase co-branded credit card, together with continued robust demand for our enhanced product offering, reinforce the strong progress we are seeing across Southwest.
"Our focus now turns to unlocking the Company's full earnings potential by continuing to optimize our network, product offering, and pricing, while continuing to strengthen financial performance. Even in a volatile fuel environment, we delivered significant earnings growth and margin expansion in the second quarter, and are positioned to do so for the remainder of 2026," said Bob Jordan, Southwest Airlines President & Chief Executive Officer.
Highlights:
Net income of $233 million, or $0.47 diluted EPS, adjusted net income¹ of $465 million, or $0.94 adjusted EPS¹ Record operating revenues of $8.4 billion, up 16.4%, the highest in Company history; adjusted operating revenues¹ of $8.7 billion, up 20.3% Unit revenues increased 16.2%; adjusted unit revenues¹ increased 20.1%, exceeding prior guidance Operating margin of 3.4%, up 0.3 points year-over-year; adjusted operating margin¹ of 6.7%, up 3.3 points year-over-year despite an $889 million increase in nominal fuel costs Returned $88 million to Shareholders through dividends Managed business revenues reached an all-time quarterly record, increasing 30% year-over-year Strong Rapid Rewards program engagement, with new enrollments increasing 35% year-over-year and record tier qualifiers, driving the program to its largest size ever at nearly 100 million Members Chase co-branded credit card acquisitions accelerated 28% year-over-year, with double-digit growth in each month of the quarter Named #1 in Customer Satisfaction among Economy Passengers in the JD Power 2026 North America Airline Satisfaction Study for the fifth consecutive year Completed the rollout of service to all five previously announced new destinations with the addition of St. Maarten, Santa Rosa, California, and Anchorage, Alaska Welcomed Air Premia as Southwest's ninth airline partner Operated the Company's first Starlink-equipped aircraft, marking the beginning of a new era of inflight connectivity at Southwest Guidance and Outlook:
The following tables provide guidance for third quarter and full-year 2026. The Company's guidance is based on the forward fuel curve as of July 17, 2026 and assumes the current fare environment and demand trends remain broadly intact.
The Company is guiding adjusted EPS1,2 for the third quarter to be in the range of $0.50 to $0.75.
For full-year 2026, the Company is guiding adjusted EPS1,2 to be in the range of $3.25 to $4.25. This updated range replaces its prior expectation of at least $4.00.
3Q 2026 Forecast
Adjusted EPS1,2
$0.50 to $0.75
ASMs (a), year-over-year
-1% to flat
RASM (b), year-over-year
17.5% to 19.5%
CASM-X (c), year-over-year1,2
3.5% to 4.0%
2026 Forecast
Adjusted EPS1,2
$3.25 to $4.25
(a) Available seat miles ("ASMs" or "capacity").
(b) Operating revenue per available seat mile ("RASM" or "unit revenues").
(c) Operating expenses per available seat mile, excluding aircraft fuel and related taxes expense, special items, and profit sharing ("CASM-X").
Revenue Results and Outlook:
Record second quarter 2026 operating revenues of $8.4 billion, up 16.4 percent year-over-year; adjusted operating revenues¹ of $8.7 billion, a 20.3 percent increase year-over-year Second quarter 2026 RASM increased 16.2 percent year-over-year, and adjusted RASM¹ increased 20.1 percent year-over-year, above prior guidance, on capacity up 0.2 percent Third quarter 2026 RASM is expected to increase between 17.5% and 19.5% year-over-year, which includes the headwind from lapping the 2025 implementation of bag fees and other initiatives Second quarter 2026 results included a $285 million adjustment for the reversal of a portion of breakage revenue recognized between 2022 and 2025 related to non-expiring flight credits issued during that same period. The accounting adjustment, which is further described in the Non-GAAP reconciliation and corresponding Non-GAAP Note, reflects a 3 percentage point increase in the Company's redemption assumption for this population of flight credits based on current redemption trends. The adjustment was treated as a special item and excluded from adjusted results. No breakage revenue related to these non-expiring flight credits was recorded during 2026.
Non-Fuel Costs and Outlook:
Second quarter 2026 operating expenses increased 16.1 percent year-over-year to $8.1 billion; operating expenses excluding special items¹ increased 16.2 percent year-over-year to $8.1 billion Second quarter 2026 operating expenses, excluding aircraft fuel and related taxes expense, special items, and profit sharing1, increased 3.6 percent year-over-year Second quarter 2026 CASM-X1 increased 3.4 percent year-over-year, below prior guidance Third quarter 2026 CASM-X1,2 is expected to increase between 3.5% and 4.0% year-over-year, which includes an expected 1.1 point headwind from the removal of six seats from the Boeing 737-700 fleet to enable extra legroom seating Fuel Costs:
Second quarter 2026 fuel cost was $3.92 per gallon, below prior assumptions of $4.10 to $4.15 per gallon. Fuel expense increased by $889 million compared to the second quarter of 2025 and represented a $1.17 headwind to adjusted EPS Third quarter 2026 fuel cost per gallon is assumed to be between $3.70 and $3.753 based on the forward curve as of July 17, 2026 Capacity, Fleet, and Capital Spending:
Second quarter 2026 capacity increased 0.2 percent year-over-year Received 13 Boeing 737-8 aircraft and retired 10 aircraft in second quarter 2026, ending the quarter with 803 aircraft (retirements included the sale of four Boeing 737-800 aircraft and one Boeing 737-700 aircraft, and the retirement of five Boeing 737-700 aircraft) Second quarter 2026 gross capital expenditures were $818 million, driven primarily by aircraft-related capital spending, as well as technology, facilities, and operational investments Expect 64 Boeing 737-8 aircraft deliveries and plan to retire approximately 60 aircraft in 2026 Entered 2026 with a disciplined capacity plan and now expect full-year growth of approximately 1.5%, versus last updated guidance of 2% Expect 2026 net capital spending4 toward the low end of, or below, the $3.0 billion to $3.5 billion range
Liquidity and Capital Deployment:
Ended second quarter 2026 with $5.3 billion in liquidity, comprised of $3.8 billion in cash and cash equivalents and a revolving credit line of $1.5 billion Ended the quarter with gross leverage1 of 2.1x Have unencumbered aircraft and other related assets with a net book value of approximately $15.7 billion Distributed $88 million in dividends during second quarter 2026 $450 million remains outstanding under the Company's $2.0 billion share repurchase authorization Conference Call:
Southwest will discuss its second quarter 2026 results on a conference call at 10:00 a.m. Eastern Time on July 23, 2026. To listen to a live broadcast of the conference call, please go to
https://www.southwestairlinesinvestorrelations.com.
Footnotes
1See Note Regarding Use of Non-GAAP Financial Measures for additional information on special items. In addition, information regarding special items is included in the accompanying table Reconciliation of Reported Amounts to Non-GAAP Items (also referred to as "excluding special items").
2Projections do not reflect the potential impact of special items and/or Aircraft fuel and related taxes expense, special items, and profit sharing because the Company cannot reliably predict or estimate those items or expenses or their impact to its financial statements in future periods, particularly given the unusual or infrequent nature of special items and especially considering the significant volatility of the Aircraft fuel and related taxes expense line item. Accordingly, the Company believes a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures for these projected results is not meaningful or available without unreasonable effort.
3Based on market prices as of July 17, 2026. Fuel cost per gallon includes fuel taxes and fuel hedging net premium expense of $0.05 per gallon related to terminated fuel derivative contracts.
4Net capital expenditures include the impact of aircraft sales and sale-leaseback transactions.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company's financial and operational outlook, expectations, goals, plans, targets, and projected results of operations, including with respect to its earnings power, growth, and margin expansion, and including factors and assumptions underlying the Company's expectations and projections; (ii) the Company's initiatives, strategic priorities and focus areas, goals, and opportunities, including with respect to the Company's positioning and momentum; (iii) the Company's capacity plans and expectations; (iv) the Company's expectations with respect to fuel costs and fuel efficiency, including factors underlying the Company's expectations; (v) the Company's expectations with respect to unlocking its full earnings potential by optimizing the Company's network, product offerings, and pricing; (vi) the Company's network plans and expectations; (vii) the Company's expectations with respect to the continued demand, including with respect to engagement across managed business and loyalty programs; (viii) the Company's plans and expectations with respect to Starlink Wi-Fi; (ix) the Company's fleet plans and expectations, including with respect to its fleet order book, fleet utilization, fleet modernization, and expected fleet deliveries and retirements, and including factors and assumptions underlying the Company's plans and expectations; and (x) the Company's plans, estimates, and assumptions related to capital spending, including factors and assumptions underlying the Company's expectations and projections. These forward-looking statements are based on the Company's current estimates, intentions, beliefs, expectations, goals, strategies, and projections for the future and are not guarantees of future performance. Forward-looking statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the impact of geopolitical conflicts, fears or actual outbreaks of diseases, extreme or severe weather and natural disasters, actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities), governmental actions, consumer perception, consumer uncertainties with respect to trade policies or government shutdowns (including the imposition of tariffs), economic conditions, banking conditions, fears or actual acts of terrorism or war, sociodemographic trends, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (ii) the Company's ability to timely and effectively implement, transition, operate, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (iii) consumer behavior and response with respect to the Company's commercial products and policies; (iv) the impact of fuel price changes, fuel price volatility, and fuel availability on the Company's business plans and results of operations; (v) the impact of governmental regulations and other governmental actions, including with respect to government shutdowns, as well as the Company's ability to obtain any required governmental approvals, on the Company's business plans, results, and operations; (vi) the Company's dependence on The Boeing Company ("Boeing") and Boeing suppliers with respect to the Company's aircraft deliveries, Boeing MAX 7 aircraft certifications, fleet and capacity plans, operations, maintenance, strategies, and goals; (vii) the Company's dependence on the Federal Aviation Administration with respect to, among other things, the certification of the Boeing MAX 7 aircraft; (viii) the Company's dependence on other third parties, in particular with respect to its technology plans, its plans and expectations related to revenue management, online travel agencies, operational reliability, fuel supply, maintenance, Global Distribution Systems, environmental sustainability, and the impact on the Company's operations and results of operations of any third-party delays or nonperformance; (ix) the Company's ability to timely and effectively prioritize its initiatives and focus areas and related expenditures; (x) the impact of labor matters on the Company's business decisions, plans, strategies, and results; (xi) the Company's ability to obtain and maintain adequate infrastructure and equipment to support its operations and initiatives; (xii) the Company's dependence on its workforce, including its ability to employ and retain sufficient numbers of qualified Employees with appropriate skills and expertise to effectively and efficiently maintain its operations and execute the Company's plans, strategies, and initiatives; (xiii) the cost and effects of the actions of activist shareholders; and (xiv) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Southwest Airlines Co.
Condensed Consolidated Statement of Income
(in millions, except per share amounts)
(unaudited)
Three months ended
Six months ended
June 30,
June 30,
2026
2025
Percent
Change
2026
2025
Percent
Change
OPERATING REVENUES:
Passenger
$ 7,745
$ 6,627
16.9
$ 14,337
$ 12,438
15.3
Freight
50
44
13.6
93
86
8.1
Other
637
573
11.2
1,252
1,148
9.1
Total operating revenues
8,432
7,244
16.4
15,682
13,672
14.7
OPERATING EXPENSES:
Salaries, wages, and benefits
3,499
3,262
7.3
6,797
6,364
6.8
Aircraft fuel and related taxes
2,215
1,326
67.0
3,571
2,575
38.7
Maintenance materials and repairs
294
331
(11.2)
552
623
(11.4)
Landing fees and airport rentals
636
567
12.2
1,208
1,090
10.8
Depreciation and amortization
402
400
0.5
800
795
0.6
Other operating expenses
1,101
1,133
(2.8)
2,139
2,223
(3.8)
Total operating expenses
8,147
7,019
16.1
15,067
13,670
10.2
OPERATING INCOME
285
225
26.7
615
2
n.m.
NON-OPERATING EXPENSES (INCOME):
Interest expense
64
39
64.1
118
85
38.8
Capitalized interest
(12)
(13)
(7.7)
(25)
(24)
4.2
Interest income
(33)
(54)
(38.9)
(57)
(138)
(58.7)
Other (gains) losses, net
(40)
(27)
48.1
(13)
(9)
44.4
Total non-operating expenses (income)
(21)
(55)
(61.8)
23
(86)
n.m.
INCOME BEFORE INCOME TAXES
306
280
9.3
592
88
n.m.
PROVISION FOR INCOME TAXES
73
67
9.0
132
24
n.m.
NET INCOME
$ 233
$ 213
9.4
$ 460
$ 64
n.m.
NET INCOME PER SHARE:
Basic
$ 0.48
$ 0.40
20.0
$ 0.93
$ 0.11
n.m.
Diluted
$ 0.47
$ 0.39
20.5
$ 0.92
$ 0.11
n.m.
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic
489
538
(9.1)
494
561
(11.9)
Diluted
493
541
(8.9)
498
564
(11.7)
Southwest Airlines Co.
Reconciliation of Reported Amounts to Non-GAAP Financial Measures (excluding special items)
(See Note Regarding Use of Non-GAAP Financial Measures)
(in millions, except per share and per ASM amounts) (unaudited)
Three months ended
Six months ended
June 30,
Percent
June 30,
Percent
2026
2025
Change
2026
2025
Change
Operating revenues, as reported
$ 8,432
$ 7,244
$ 15,682
$ 13,672
(a)
Add: Breakage revenue adjustment
285
—
285
—
Operating revenues, excluding special items
$ 8,717
$ 7,244
20.3
$ 15,967
$ 13,672
16.8
Aircraft fuel and related taxes, unhedged
$ 2,186
$ 1,290
$ 3,513
$ 2,502
(b)
Add: Premium cost of fuel contracts designated as hedges
29
36
58
73
Aircraft fuel and related taxes, as reported
$ 2,215
$ 1,326
67.0
$ 3,571
$ 2,575
38.7
Total operating expenses, as reported
$ 8,147
$ 7,019
$ 15,067
$ 13,670
Deduct: Impairment of long-lived assets
—
(8)
—
(8)
Deduct: Litigation accruals
—
—
—
(19)
Deduct: Transformation costs
—
(12)
—
(26)
(c)
Deduct: Severance and related costs
(15)
—
(15)
(62)
Total operating expenses, excluding special items
$ 8,132
$ 6,999
16.2
$ 15,052
$ 13,555
11.0
Deduct: Aircraft fuel and related taxes expense, as reported
(2,215)
(1,326)
(3,571)
(2,575)
Operating expenses, excluding Aircraft fuel and related taxes expense and special items
$ 5,917
$ 5,673
4.3
$ 11,481
$ 10,980
4.6
Deduct: Profit-sharing expense
(53)
(14)
(103)
(14)
Operating expenses, excluding Aircraft fuel and related taxes expense, special items, and profit sharing
$ 5,864
$ 5,659
3.6
$ 11,378
$ 10,966
3.8
Operating income, as reported
$ 285
$ 225
$ 615
$ 2
(a)
Add: Breakage revenue adjustment
285
—
285
—
Add: Impairment of long-lived assets
—
8
—
8
Add: Litigation accruals
—
—
—
19
Add: Transformation costs
—
12
—
26
(c)
Add: Severance and related costs
15
—
15
62
Operating income, excluding special items
$ 585
$ 245
138.8
$ 915
$ 117
682.1
Total operating revenues, as reported
$ 8,432
$ 7,244
$ 15,682
$ 13,672
Operating margin, as reported
3.4 %
3.1 %
0.3 pts.
3.9 %
— %
3.9 pts.
Add: Impact of special items
3.3 %
0.3 %
1.8 %
0.9 %
Operating margin, excluding special items
6.7 %
3.4 %
3.3 pts.
5.7 %
0.9 %
4.8 pts.
Income before income taxes, as reported
$ 306
$ 280
$ 592
$ 88
(a)
Add: Breakage revenue adjustment
285
—
285
—
Add: Litigation accruals
—
—
—
19
Add: Transformation costs
—
12
—
26
(c)
Add: Severance and related costs
15
—
15
62
Add: Impairment of long-lived assets
—
8
—
8
Income before income taxes, excluding special items
$ 606
$ 300
102.0
$ 892
$ 203
339.4
Provision for income taxes, as reported
$ 73
$ 67
$ 132
$ 24
(d)
Add: Net income tax impact of fuel and special items
68
3
69
26
Provision for income taxes, net, excluding special items
$ 141
$ 70
101.4
$ 201
$ 50
302.0
Net income, as reported
$ 233
$ 213
$ 460
$ 64
(a)
Add: Breakage revenue adjustment
285
—
285
—
Add: Litigation accruals
—
—
—
19
Add: Transformation costs
—
12
—
26
(c)
Add: Severance and related costs
15
—
15
62
Add: Impairment of long-lived assets
—
8
—
8
(d)
Deduct: Net income tax impact of special items
(68)
(3)
(69)
(26)
Net income, excluding special items
$ 465
$ 230
102.2
$ 691
$ 153
351.6
Total operating revenues, as reported
$ 8,432
$ 7,244
$ 15,682
$ 13,672
Net margin, as reported
2.8 %
2.9 %
(0.1) pts.
2.9 %
0.5 %
2.4 pts.
Add: Impact of special items
3.3 %
0.3 %
1.8 %
0.8 %
(d)
Deduct: Net income tax impact of special items
(0.8) %
— %
(0.4) %
(0.2) %
Net margin, excluding special items
5.3 %
3.2 %
2.1 pts.
4.3 %
1.1 %
3.2 pts.
Net income per share, diluted, as reported
$ 0.47
$ 0.39
$ 0.92
$ 0.11
Add: Impact of special items
0.61
0.05
0.61
0.21
(d)
Deduct: Net income tax impact of special items
(0.14)
(0.01)
(0.14)
(0.05)
Net income per share, diluted, excluding special items
$ 0.94
$ 0.43
118.6
$ 1.39
$ 0.27
414.8
Operating revenues per ASM (cents), as reported
17.91 ¢
15.41 ¢
17.59 ¢
15.46 ¢
Add: Impact of special items
0.60
—
0.32
—
Operating revenues per ASM, excluding special items (cents)
18.51 ¢
15.41 ¢
20.1
17.91 ¢
15.46 ¢
15.8
Operating expenses per ASM (cents)
17.30 ¢
14.94 ¢
16.90 ¢
15.46 ¢
Deduct: Impact of special items
(0.04)
(0.04)
(0.02)
(0.13)
Deduct: Aircraft fuel and related taxes expense divided by ASMs
(4.70)
(2.83)
(4.00)
(2.91)
Deduct: Profit-sharing expense divided by ASMs
(0.11)
(0.03)
(0.12)
(0.02)
Operating expenses per ASM, excluding Aircraft fuel and related taxes expense, special items, and profit sharing (cents)
12.45 ¢
12.04 ¢
3.4
12.76 ¢
12.40 ¢
2.9
(a) Represents a change in breakage revenue estimate related to non-expiring flight credits the Company issued to Passengers between July 2022 and December 2025. Due to higher-than-projected Customer redemptions of these non-expiring flight credits, along with updated projections of future redemptions, the Company has revised its estimates with regards to the remaining non-expiring flight credits that remain available for redemption.
(b) Includes amounts reclassified from Accumulated other comprehensive income associated with hedges previously terminated.
(c) Represents Employee severance and other related payments resulting from corporate workforce reductions.
(d) Tax amounts for each individual special item are calculated at the Company's effective rate for the applicable period and totaled in this line item.
Southwest Airlines Co.
Comparative Consolidated Operating Statistics
(unaudited)
Relevant comparative operating statistics for the three and six months ended June 30, 2026 and 2025 are included below. The Company provides these operating
statistics because they are commonly used in the airline industry and, as such, allow readers to compare the Company's performance against its results for the
prior year period, as well as against the performance of the Company's peers.
Three months ended
Six months ended
June 30,
Percent
June 30,
Percent
2026
2025
Change
2026
2025
Change
Revenue passengers carried (000s)
34,331
35,507
(3.3)
63,506
65,497
(3.0)
Enplaned passengers (000s)
44,518
44,385
0.3
81,795
81,524
0.3
Revenue passenger miles (RPMs) (in millions) (a)
37,346
36,885
1.2
68,497
67,513
1.5
Available seat miles (ASMs) (in millions) (b)
47,093
46,996
0.2
89,142
88,427
0.8
Load factor (c)
79.3 %
78.5 %
0.8 pts.
76.8 %
76.3 %
0.5 pts.
Average length of passenger haul (miles)
1,088
1,039
4.7
1,079
1,031
4.7
Average aircraft stage length (miles)
784
786
(0.3)
781
779
0.3
Trips flown
367,740
367,952
(0.1)
698,110
699,838
(0.2)
Seats flown (000s) (d)
59,009
59,265
(0.4)
112,039
112,502
(0.4)
Seats per trip (e)
160.5
161.1
(0.4)
160.5
160.8
(0.2)
Average passenger fare
$ 225.61
$ 186.65
20.9
$ 225.76
$ 189.90
18.9
Passenger revenue yield per RPM (cents) (f)
20.74
17.97
15.4
20.93
18.42
13.6
RASM (cents) (g)
17.91
15.41
16.2
17.59
15.46
13.8
RASM, excluding special items (cents)
18.51
15.41
20.1
17.91
15.46
15.8
PRASM (cents) (h)
16.45
14.10
16.7
16.08
14.07
14.3
CASM (cents) (i)
17.30
14.94
15.8
16.90
15.46
9.3
CASM, excluding fuel (cents)
12.60
12.11
4.0
12.90
12.55
2.8
CASM, excluding special items (cents)
17.27
14.89
16.0
16.89
15.33
10.2
CASM, excluding fuel and special items (cents)
12.56
12.07
4.1
12.88
12.42
3.7
CASM, excluding fuel, special items, and profit sharing (cents)
12.45
12.04
3.4
12.76
12.40
2.9
Fuel costs per gallon, including fuel tax (unhedged)
$ 3.87
$ 2.26
71.2
$ 3.31
$ 2.33
42.1
Fuel costs per gallon, including fuel tax
$ 3.92
$ 2.32
69.0
$ 3.37
$ 2.40
40.4
Fuel consumed, in gallons (millions)
564
570
(1.1)
1,059
1,071
(1.1)
Active fulltime equivalent Employees
73,456
72,242
1.7
73,456
72,242
1.7
Aircraft at end of period
803
810
(0.9)
803
810
(0.9)
(a) A revenue passenger mile is one paying passenger flown one mile. Also referred to as "traffic," which is a measure of demand for a given period.
(b) An available seat mile is one seat (empty or full) flown one mile. Also referred to as "capacity," which is a measure of supply or the space available to carry passengers in a given period.
(c) Revenue passenger miles divided by available seat miles.
(d) Seats flown is calculated using total number of seats available by aircraft type multiplied by the total trips flown by the same aircraft type during a particular period.
(e) Seats per trip is calculated by dividing seats flown by trips flown.
(f) Calculated as passenger revenue divided by revenue passenger miles. Also referred to as "yield," this is the average cost paid by a paying passenger to fly one mile, which is a measure of revenue production and fares.
(g) RASM (unit revenue) - Operating revenue yield per ASM, calculated as operating revenue divided by available seat miles. Also referred to as "operating unit revenues," this is a measure of operating revenue production based on the total available seat miles flown during a particular period.
(h) PRASM (Passenger unit revenue) - Passenger revenue yield per ASM, calculated as passenger revenue divided by available seat miles. Also referred to as "passenger unit revenues," this is a measure of passenger revenue production based on the total available seat miles flown during a particular period.
(i) CASM (unit costs) - Operating expenses per ASM, calculated as operating expenses divided by available seat miles. Also referred to as "unit costs" or "cost per available seat mile," this is the average cost to fly an aircraft seat (empty or full) one mile, which is a measure of cost efficiency.
Southwest Airlines Co.
Condensed Consolidated Balance Sheet
(in millions)
(unaudited)
June 30, 2026
December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents
$ 3,791
$ 3,231
Accounts and other receivables
1,218
1,149
Inventories of parts and supplies, at cost
917
775
Prepaid expenses and other current assets
556
490
Total current assets
6,482
5,645
Property and equipment, at cost:
Flight equipment
26,198
26,293
Ground property and equipment
9,485
9,163
Deposits on flight equipment purchase contracts
616
401
Assets constructed for others
88
88
36,387
35,945
Less allowance for depreciation and amortization
15,745
15,700
20,642
20,245
Goodwill
970
970
Operating lease right-of-use assets
953
1,089
Other assets
1,075
1,112
$ 30,122
$ 29,061
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 2,072
$ 1,991
Accrued liabilities
2,247
2,349
Current operating lease liabilities
283
312
Air traffic liability
6,510
5,945
Current maturities of long-term debt
2,156
324
Total current liabilities
13,268
10,921
Long-term debt less current maturities
3,790
4,577
Air traffic liability - noncurrent
1,674
1,219
Deferred income taxes
2,421
2,289
Noncurrent operating lease liabilities
660
768
Other noncurrent liabilities
1,227
1,306
Stockholders' equity:
Common stock
888
888
Capital in excess of par value
4,294
4,322
Retained earnings
16,672
16,388
Accumulated other comprehensive income (loss)
22
(24)
Treasury stock, at cost
(14,794)
(13,593)
Total stockholders' equity
7,082
7,981
$ 30,122
$ 29,061
Southwest Airlines Co.
Condensed Consolidated Statement of Cash Flows
(in millions) (unaudited)
Three months ended
June 30,
Six months ended
June 30,
2026
2025
2026
2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$ 233
$ 213
$ 460
$ 64
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
402
400
800
795
Impairment of long-lived assets
—
8
—
8
Deferred income taxes
60
66
117
23
Gain on sale-leaseback transactions
—
—
—
(3)
Changes in certain assets and liabilities:
Accounts and other receivables
37
90
(56)
146
Other assets
(54)
212
(115)
357
Accounts payable and accrued liabilities
23
(95)
(56)
(220)
Air traffic liability
(65)
(606)
1,021
55
Other liabilities
(53)
28
(130)
(35)
Cash collateral provided to derivative counterparties
—
—
—
(22)
Other, net
(53)
85
(94)
93
Net cash provided by operating activities
530
401
1,947
1,261
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(818)
(660)
(1,448)
(1,187)
Proceeds from sale of property and equipment
258
25
450
51
Proceeds from sale-leaseback transactions
—
—
—
24
Purchases of short-term investments
—
(319)
—
(370)
Proceeds from sales of short-term and other investments
—
72
—
1,226
Other, net
—
—
(6)
(3)
Net cash used in investing activities
(560)
(882)
(1,004)
(259)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt
1,000
—
1,500
—
Proceeds from Employee stock plans
15
15
31
32
Repurchase of common stock
—
(1,500)
(1,250)
(2,250)
Payments of long-term debt and finance lease obligations
(431)
(2,592)
(437)
(2,598)
Payments of cash dividends
(88)
(103)
(181)
(210)
Other, net
(3)
2
(46)
(10)
Net cash provided by (used in) financing activities
493
(4,178)
(383)
(5,036)
NET CHANGE IN CASH AND CASH EQUIVALENTS
463
(4,659)
560
(4,034)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
3,328
8,134
3,231
7,509
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 3,791
$ 3,475
$ 3,791
$ 3,475
NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES
The Company's unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP. These GAAP financial statements include (i) unrealized noncash reclassifications, as a result of accounting requirements and elections previously made under accounting pronouncements relating to derivative instruments and hedging and (ii) other charges and benefits the Company considers unusual and/or infrequent in nature and thus may make comparisons to its prior or future performance difficult.
Accordingly, the Company also provides financial information in this filing that was not prepared in accordance with GAAP and should not be considered as a substitute for the information prepared in accordance with GAAP. The Company provides supplemental non-GAAP financial information (also referred to as "excluding special items"). Management believes special items can distort the trends associated with the Company's ongoing performance. Therefore, management utilizes non-GAAP financial measures to evaluate the Company's financial performance, anticipate future operating results, and assess trends without the impact of items that can vary significantly from period to period. The following measures are often provided, excluding special items, and are utilized by the Company's management, analysts, and investors to enhance comparability of year-over-year results, as well as to industry trends: Operating revenues, non-GAAP; Total operating expenses, non-GAAP; Operating expenses, non-GAAP excluding Aircraft fuel and related taxes expense; Operating expenses, non-GAAP excluding Aircraft fuel and related taxes expense and profit sharing; Operating income, non-GAAP; Adjusted Operating income, non-GAAP; Income before income taxes, non-GAAP; Provision for income taxes, net, non-GAAP; Net income, non-GAAP; Net income per share, diluted, non-GAAP; Operating revenues per ASM, non-GAAP (cents); Operating expenses per ASM, non-GAAP, excluding Aircraft fuel and related taxes expense and profit sharing (cents); Return on invested capital, non-GAAP; adjusted operating margin; adjusted net margin; and gross leverage.
For the periods presented, special items include:
Charges associated with tentative litigation settlements regarding paid short-term military leave to certain Employees; Expenses associated with professional advisory fees related to the Company's implementation of its comprehensive transformational plan; Charges associated with Employee severance and other related payments resulting from corporate workforce reductions; Reversal of breakage revenue recorded in prior years related to a portion of non-expiring flight credits issued to Customers between July 2022 and December 2025 that have either been redeemed or are expected to be redeemed in future periods; Non-cash impairment charges to remove certain assets from the unaudited Condensed Consolidated Balance Sheet that are no longer in use; Expenses associated with incremental professional advisory fees related to activist investor activities, which were not budgeted by the Company or associated with the ongoing operation of the airline; Incremental expense associated with a voluntary separation program that allowed eligible Employees the opportunity to voluntarily separate from the Company in exchange for severance, medical/dental coverage for a specified period of time, and travel privileges based on years of service; and A charge associated with a settlement reached with the Department of Transportation ("DOT") as a result of the Company's December 2022 operational disruption. The Company has also provided its calculation of return on invested capital, which is a measure of financial performance used by management to evaluate its investment returns on capital. Return on invested capital is not a substitute for financial results as reported in accordance with GAAP and should not be utilized in place of such GAAP results. Return on invested capital is not a measure defined by GAAP. It is calculated by the Company, in part, using non-GAAP financial measures, which include charges or benefits that are deemed "special items." As noted above, the Company believes "special items" make it difficult to compare to prior periods, anticipated future periods, or industry trends since these items cannot be reliably predicted or estimated. The Company believes non-GAAP return on invested capital is a meaningful measure because it quantifies the Company's effectiveness in generating returns relative to the capital it has invested in its business. Although return on invested capital is commonly used as a measure of capital efficiency, definitions of return on invested capital differ; therefore, the Company is providing an explanation of its calculation for non-GAAP return on invested capital in the accompanying reconciliation in order to allow investors to compare and contrast its calculation to the calculations provided by other companies.
Southwest Airlines Co.
Non-GAAP Return on Invested Capital (ROIC)
(in millions)
(unaudited)
Twelve months ended
Twelve months ended
June 30, 2026
June 30, 2025
Operating income, as reported
$ 1,041
$ 318
Breakage revenue adjustment
285
116
Severance and related costs
15
62
Voluntary Employee programs
—
5
Net impact from fuel contracts
—
(43)
Professional advisory fees
—
30
Transformation costs
7
30
DOT settlement
(11)
—
Litigation accruals
—
19
Impairments
—
8
Operating income, non-GAAP
$ 1,337
$ 545
Net adjustment for aircraft leases (a)
211
182
Adjusted operating income, non-GAAP (A)
$ 1,548
$ 727
Non-GAAP tax rate (B)
22.4 %
(d)
22.6 %
(e)
Net operating profit after-tax, NOPAT (A* (1-B) = C)
$ 1,201
$ 563
Debt, including finance leases (b)
$ 4,888
$ 6,699
Equity (b)
7,543
9,718
Net present value of aircraft operating leases (b)
857
967
Average invested capital
$ 13,288
$ 17,384
Equity adjustment for hedge accounting (c)
8
31
Adjusted average invested capital (D)
$ 13,296
$ 17,415
Non-GAAP ROIC, pre-tax (A/D)
11.6 %
4.2 %
Non-GAAP ROIC, after-tax (C/D)
9.0 %
3.2 %
(a) Net adjustment to reflect all aircraft in fleet as owned (i.e., the impact of eliminating aircraft rent expense and replacing with estimated depreciation expense for those same aircraft). The Company makes this adjustment to enhance comparability to other entities that have different capital structures by utilizing alternative financing decisions.
(b) Calculated as an average of the five most recent quarter end balances or remaining obligations. The Net present value of aircraft operating leases represents the assumption that all aircraft in the Company's fleet are owned, as it reflects the remaining contractual commitments discounted at the Company's estimated incremental borrowing rate as of the time each individual lease was signed.
(c) The Equity adjustment in the denominator adjusts for the cumulative impacts, in Accumulated other comprehensive income and Retained earnings, of gains and/or losses that will settle in future periods, including those associated with the Company's terminated fuel hedges. The current period impact of these gains and/or losses is reflected in the Net impact from fuel contracts in the numerator.
(d) The GAAP twelve month rolling tax rate as of June 30, 2026, was 21.5 percent, and the Non-GAAP twelve month rolling tax rate was 22.4 percent. See Note Regarding Use of Non-GAAP Financial Measures for additional information.
(e) The GAAP twelve month rolling tax rate as of June 30, 2025, was 22.3 percent, and the Non-GAAP twelve month rolling tax rate was 22.6 percent. See Note Regarding Use of Non-GAAP Financial Measures for additional information.
The Company has also provided gross leverage, which is calculated as adjusted debt divided by trailing twelve month adjusted EBITDAR. Leverage, adjusted debt, and adjusted EBITDAR are non-GAAP measures of financial performance. Management believes these supplemental measures can provide a more accurate view of the Company's leverage and risk, since they consider the Company's debt and debt-like obligation profile. Leverage ratios are widely used by investors, analysts, and rating agencies in the valuation, comparison, rating, and investment recommendations of companies. Although adjusted debt, adjusted EBITDAR, and leverage ratios are commonly-used financial measures, definitions of each differ; therefore, the Company is providing an explanation of its calculations for non-GAAP adjusted debt and adjusted EBITDAR in the accompanying reconciliation below in order to allow investors to compare and contrast its calculations to the calculations provided by other companies.
Southwest Airlines Co.
Non-GAAP Gross Leverage
(in millions) (unaudited)
June 30, 2026
Current maturities of long-term debt, as reported
$ 2,156
Long-term debt less current maturities, as reported
3,790
Total debt, including finance leases (A)
5,946
Add: Current operating lease liabilities, as reported
283
Add: Noncurrent operating lease liabilities, as reported
660
Adjusted debt (B)
$ 6,889
Twelve Months Ended
June 30, 2026
Net income, as reported (C)
$ 837
Interest expense (income), net of capitalized interest, as reported
22
Income tax expense (benefit), as reported
229
Non-operating other (gains) losses, net, as reported
Southwest Airlines reported a more than 9% increase in second-quarter profit from last year as higher fares are increasingly helping the airline cover its fuel tab, but its outlook for the summer fell below Wall Street forecasts.
The airline forecast third-quarter adjusted earnings of between 50 cents and 75 cents, below the 82 cents analysts expected, even though it projected an increase in sales between 17.5% to 19.5% from a year earlier. The Dallas airline said it plans to contract capacity 1% at most or keep it flat compared with the third quarter of 2025.
In the second quarter, Southwest's revenue increased 16.4% to $8.4 billion. Average passenger fares were up almost 21% to $225.61 from $186.65 a year earlier. But Southwest's costs spiked, with a 67% increase in its fuel bill to $2.22 billion in the second quarter from a year before.
Net income rose 9.4% to $233 million, or 47 cents a share, compared with $213 million or 39 cents a share a year earlier.
Here's what Southwest reported for second quarter compared with Wall Street expectations, according to consensus estimates from LSEG:
Earnings per share: 94 cents adjusted. It was not immediately clear if that was comparable to expectations for 51 centsRevenue: $8.43 billion vs. $8.58 billion expectedExcluding one-time items, Southwest reported an adjusted 94 cents per share, including an adjustment for customers that redeemed flight credits in higher numbers than projected. Southwest changed its old policy and put expiration dates on flight credits, starting with many ticket classes sold starting in mid-2025.
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, ExplainedThe Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.
Should You Consider United Parcel Service?Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. United Parcel Service (UPS - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.66 a share, just seven days from its upcoming earnings release on July 28, 2026.
By taking the percentage difference between the $1.66 Most Accurate Estimate and the $1.65 Zacks Consensus Estimate, United Parcel Service has an Earnings ESP of +1.06%. Investors should also know that UPS is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
UPS is one of just a large database of Transportation stocks with positive ESPs. Another solid-looking stock is Southwest Airlines (LUV - Free Report) .
Southwest Airlines, which is readying to report earnings on July 22, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $0.54 a share, and LUV is one day out from its next earnings report.
Southwest Airlines' Earnings ESP figure currently stands at +4.60% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.52.
UPS and LUV's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
Find Stocks to Buy or Sell Before They're ReportedUse the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>
Wall Street analysts expect Southwest Airlines (LUV - Free Report) to post quarterly earnings of $0.52 per share in its upcoming report, which indicates a year-over-year increase of 20.9%. Revenues are expected to be $8.58 billion, up 18.4% from the year-ago quarter.
The consensus EPS estimate for the quarter has been revised 34.6% higher over the last 30 days to the current level. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe.
Ahead of a company's earnings disclosure, it is crucial to give due consideration to changes in earnings estimates. These revisions serve as a noteworthy factor in predicting potential investor reactions to the stock. Numerous empirical studies consistently demonstrate a strong relationship between trends in earnings estimate revision and the short-term price performance of a stock.
While investors usually depend on consensus earnings and revenue estimates to assess the business performance for the quarter, delving into analysts' forecasts for certain key metrics often provides a more comprehensive understanding.
That said, let's delve into the average estimates of some Southwest metrics that Wall Street analysts commonly model and monitor.
Analysts predict that the 'Operating Revenues- Passenger [$M]' will reach $7.86 billion. The estimate points to a change of +18.7% from the year-ago quarter.
According to the collective judgment of analysts, 'Operating Revenues- Other' should come in at $661.19 million. The estimate indicates a change of +15.4% from the prior-year quarter.
The combined assessment of analysts suggests that 'Operating Revenues- Freight [$M]' will likely reach $51.87 million. The estimate points to a change of +17.9% from the year-ago quarter.
It is projected by analysts that the 'Load factor' will reach 81.4%. Compared to the current estimate, the company reported 78.5% in the same quarter of the previous year.
Based on the collective assessment of analysts, 'Passenger revenue per ASM (PRASM)' should arrive at N/A. Compared to the present estimate, the company reported N/A in the same quarter last year.
Analysts' assessment points toward 'Revenue passenger miles (RPMs)' reaching 38.50 billion. The estimate compares to the year-ago value of 36.89 billion.
Analysts expect 'Available seat miles (ASMs)' to come in at 47.11 billion. Compared to the current estimate, the company reported 47.00 billion in the same quarter of the previous year.
The collective assessment of analysts points to an estimated 'CASM, excluding Fuel and oil expense, special items, and profit sharing expense' of N/A. The estimate compares to the year-ago value of N/A.
Analysts forecast 'Revenue Per Available Seat Mile (RASM)' to reach N/A. The estimate compares to the year-ago value of N/A.
The average prediction of analysts places 'Passenger revenue yield per RPM' at N/A. Compared to the present estimate, the company reported N/A in the same quarter last year.
The consensus among analysts is that 'Operating Expense per ASM (CASM)' will reach N/A. The estimate compares to the year-ago value of N/A.
The consensus estimate for 'Fuel consumed' stands at 544 millions of gallons. The estimate compares to the year-ago value of 570 millions of gallons.
View all Key Company Metrics for Southwest here>>>
Southwest shares have witnessed a change of +0.2% in the past month, in contrast to the Zacks S&P 500 composite's +0.6% move. With a Zacks Rank #3 (Hold), LUV is expected closely follow the overall market performance in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Bank of New York Mellon Corp lifted its holdings in shares of Southwest Airlines Co. (NYSE:LUV – Free Report) by 4.7% in the 1st quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission. The firm owned 3,924,407 shares of the airline’s stock after buying an additional 176,742 shares during the period. Bank of New York Mellon Corp owned approximately 0.80% of Southwest Airlines worth $147,440,000 at the end of the most recent reporting period.
A number of other institutional investors and hedge funds have also added to or reduced their stakes in LUV. Norges Bank bought a new stake in Southwest Airlines during the 4th quarter valued at $172,038,000. SG Americas Securities LLC increased its holdings in shares of Southwest Airlines by 2,468.4% during the fourth quarter. SG Americas Securities LLC now owns 3,752,352 shares of the airline’s stock valued at $155,085,000 after purchasing an additional 3,606,255 shares during the period. Massachusetts Financial Services Co. MA acquired a new position in shares of Southwest Airlines during the fourth quarter valued at $143,450,000. Franklin Resources Inc. raised its stake in shares of Southwest Airlines by 7.0% during the fourth quarter. Franklin Resources Inc. now owns 40,200,530 shares of the airline’s stock valued at $1,661,488,000 after purchasing an additional 2,626,853 shares in the last quarter. Finally, Mizuho Markets Americas LLC bought a new stake in shares of Southwest Airlines during the fourth quarter valued at about $55,320,000. 80.82% of the stock is owned by institutional investors.
Wall Street Analyst Weigh In LUV has been the subject of a number of recent analyst reports. JPMorgan Chase & Co. decreased their target price on shares of Southwest Airlines from $58.00 to $56.00 in a research report on Friday, March 27th. Citigroup boosted their price target on shares of Southwest Airlines from $44.00 to $55.00 and gave the stock a “neutral” rating in a research report on Friday, June 26th. Zacks Research raised shares of Southwest Airlines from a “strong sell” rating to a “hold” rating in a research note on Thursday, June 25th. BMO Capital Markets increased their price objective on shares of Southwest Airlines from $45.00 to $58.50 and gave the company an “outperform” rating in a report on Thursday, July 2nd. Finally, Weiss Ratings cut shares of Southwest Airlines from a “hold (c+)” rating to a “hold (c)” rating in a report on Monday, June 8th. Nine analysts have rated the stock with a Buy rating, nine have given a Hold rating and four have issued a Sell rating to the company. According to MarketBeat.com, Southwest Airlines has a consensus rating of “Hold” and an average target price of $49.58.
View Our Latest Report on Southwest Airlines
Southwest Airlines Price Performance Shares of NYSE LUV opened at $48.09 on Monday. Southwest Airlines Co. has a twelve month low of $28.98 and a twelve month high of $55.11. The company has a current ratio of 0.48, a quick ratio of 0.41 and a debt-to-equity ratio of 0.66. The company has a market capitalization of $23.50 billion, a price-to-earnings ratio of 31.02, a PEG ratio of 0.45 and a beta of 1.12. The firm has a 50-day moving average of $45.26 and a two-hundred day moving average of $44.12.
Southwest Airlines (NYSE:LUV – Get Free Report) last announced its quarterly earnings data on Wednesday, April 22nd. The airline reported $0.45 earnings per share (EPS) for the quarter, hitting the consensus estimate of $0.45. Southwest Airlines had a net margin of 2.83% and a return on equity of 10.66%. The company had revenue of $7.25 billion for the quarter, compared to analysts’ expectations of $8.46 billion. During the same quarter in the previous year, the company posted ($0.13) EPS. The business’s revenue was up 12.8% compared to the same quarter last year. Southwest Airlines has set its Q2 2026 guidance at 0.350-0.650 EPS. As a group, analysts expect that Southwest Airlines Co. will post 3.23 earnings per share for the current fiscal year.
Southwest Airlines Announces Dividend The firm also recently announced a quarterly dividend, which was paid on Thursday, July 2nd. Investors of record on Thursday, June 11th were issued a dividend of $0.18 per share. This represents a $0.72 dividend on an annualized basis and a yield of 1.5%. The ex-dividend date was Thursday, June 11th. Southwest Airlines’s dividend payout ratio (DPR) is presently 46.45%.
Southwest Airlines Profile (Free Report)
Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest’s operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.
Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.
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Key Takeaways LUV's Q2 EPS estimate of 52 cents is down 3.70% in 60 days, while up 20.93% from last year's actual.Strong bookings and higher ticket prices are expected to drive 18.38% revenue growth to $8.58B.Rising labor costs may pressure margins; LUV's -1.21% ESP and Zacks Rank #3 hint at a possible miss. Southwest Airlines Co. (LUV - Free Report) is scheduled to report second-quarter 2026 results on July 22.
Southwest Airlines has an encouraging earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters (missed the mark in one of the remaining quarters and matched the mark in another quarter), delivering an average beat of 246.97%.
Image Source: Zacks Investment Research
Let’s see how things have shaped up for Southwest Airlines this earnings season.
Factors Likely to Have Influenced LUV’s Q2 PerformanceThe Zacks Consensus Estimate for LUV’s second-quarter 2026 revenues is pegged at $8.58 billion, indicating 18.38% growth year over year. Management anticipates second-quarter 2026 unit revenues (RASM) to increase in the range of 16.5% to 18.5%,on a year-over-year basis, with capacity up flat to up 1% year over year.
We expect LUV's performance in the to-be-reported quarter to have been boosted by an uptick in total revenues, driven by high passenger revenues, as domestic air-travel demand stabilizes. Our estimate for passenger revenues in the to-be-reported quarter indicates a 18.5% increase from the second-quarter 2025 actual.
LUV is also expected to benefit from revenue initiatives and continued cost control, which contribute to solid results and strong momentum. LUV’s customer-focused product offering, operational excellence and dramatic progress from the transformational initiatives implemented last year are likely to act as other tailwinds. Further, Southwest Airlines’ lean cost structure, expanding operations and strategic partnerships, coupled with its efforts to reward its shareholders, also bode well.
The Zacks Consensus Estimate for LUV’s second-quarter 2026 earnings has been revised downward by 3.70% in the past 60 days to 52 cents per share. However, the consensus mark implies an upside of 20.93% from the year-ago actual. The consensus estimate lies within the company-provided guided range of 35-65 cents.
Image Source: Zacks Investment Research
Fuel remains a key swing factor in near-term results. Notably, oil prices declined by almost 31% during the April-June 2026 period, with oil prices being down 20% during the month of June 2026 alone. As fuel expenses represent a key input cost for any transportation player, a fall in oil prices bodes well for the bottom-line growth of airline stocks. For the second quarter of 2026, the company assumes fuel cost per gallon to be between $4.10 and $4.15.
Escalated labor and airport costs are also likely to have been high, which would have hurt the company’s bottom-line performance in the June quarter. LUV expects to continue experiencing increased cost pressure from the labor agreements and deals inked with the pilots. We expect operating costs to increase 16.9% in the second quarter of 2026 from first-quarter 2025 actuals, led by the 5.9% rise in salaries and related costs.
LUV anticipates second-quarter 2026 CASM-X to be between 3.5% and 4.0% year over year, which includes an expected 1.2-point impact from the removal of six seats from the Boeing 737-700 fleet to enable extra legroom seating.
What Our Model Says About LUVOur proven model does not conclusively predict an earnings beat for Southwest Airlines this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Southwest Airlines has an Earnings ESP of -1.21% and a Zacks Rank #3.
Highlights of LUV’s Q1 EarningsSouthwest Airlines reported first-quarter of 2026 earnings per share of 45 cents, in line with the Zacks Consensus Estimate and improving from a loss of 13 cents in the year-ago quarter. The quarter reflected solid execution as the carrier’s commercial and cost initiatives began showing up more clearly in reported results.
Operating revenues of $7.24 billion edged past the Zacks Consensus Estimate of $7.21 billion for a 0.4% surprise and rose 12.8% year over year.
Stocks to ConsiderHere are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
CSX Corporation (CSX - Free Report) has an Earnings ESP of +1.31% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CSX is scheduled to report second-quarter 2026 earnings on July 22. The Zacks Consensus Estimate for second-quarter 2026 earnings has been revised marginally upward over the past 30 days. CSX’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed in the remaining one, the average beat being 3.2%.
Expeditors International of Washington (EXPD - Free Report) has an Earnings ESP of +2.00% and a Zacks Rank #2 at present.
EXPD is set to report second-quarter 2026 earnings on Aug. 4. The Zacks Consensus Estimate for Expeditors’ second-quarter 2026 earnings has been revised 2.52% upward over the past 60 days. EXPD’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, delivering an average beat of 13.96%.
Schneider National (SNDR - Free Report) has an Earnings ESP of +1.50% and a Zacks Rank #2 at present. SNDR is scheduled to report second-quarter 2026 earnings on July 30.
The Zacks Consensus Estimate for second-quarter 2026 earnings has remained flat at 22 cents over the past 60 days. SNDR’s earnings beat the Zacks Consensus Estimate in one of the preceding four quarters (missing the mark twice and met the mark once in the remaining three quarters). The average miss is 17.97%.
Southwest Airlines (LUV - Free Report) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2026. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.
The earnings report, which is expected to be released on July 22, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.
Zacks Consensus EstimateThis airline is expected to post quarterly earnings of $0.52 per share in its upcoming report, which represents a year-over-year change of +20.9%.
Revenues are expected to be $8.58 billion, up 18.4% from the year-ago quarter.
Estimate Revisions TrendThe consensus EPS estimate for the quarter has been revised 28.26% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.
Price, Consensus and EPS Surprise
Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core.
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.
Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.
A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.
Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).
How Have the Numbers Shaped Up for Southwest?For Southwest, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -1.21%.
On the other hand, the stock currently carries a Zacks Rank of #3.
So, this combination makes it difficult to conclusively predict that Southwest will beat the consensus EPS estimate.
Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.
For the last reported quarter, it was expected that Southwest would post earnings of $0.45 per share when it actually produced earnings of $0.45, delivering no surprise.
Over the last four quarters, the company has beaten consensus EPS estimates two times.
Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.
That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
Southwest doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.
An Industry Player's Expected ResultsAnother stock from the Zacks Transportation - Airline industry, Alaska Air Group (ALK - Free Report) , is soon expected to post loss of $0.97 per share for the quarter ended June 2026. This estimate indicates a year-over-year change of -154.5%. Revenues for the quarter are expected to be $4.09 billion, up 10.6% from the year-ago quarter.
Over the last 30 days, the consensus EPS estimate for Alaska Air has been revised 76.1% up to the current level. Nevertheless, the company now has an Earnings ESP of -0.88%, reflecting a lower Most Accurate Estimate.
This Earnings ESP, combined with its Zacks Rank #3 (Hold), makes it difficult to conclusively predict that Alaska Air will beat the consensus EPS estimate. Over the last four quarters, the company surpassed consensus EPS estimates two times.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Southwest Airlines (LUV) is rated 'Hold' with a $44/share price target, reflecting transformation upside but significant fuel and execution risks. LUV's 1Q26 results validated cost management and fee adoption strategies, but fuel price volatility and lack of hedging threaten full-year EPS targets. Management's $4/share 2026 EPS guidance appears optimistic; my revised estimate is $2.9/share, accounting for higher jet fuel costs and execution risks.
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.
The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.
Zacks Premium includes access to the Zacks Style Scores as well.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.
The Style Scores are broken down into four categories:
Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.
Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.
#1 (Strong Buy) stocks have produced an unmatched +23.94% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.
This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.
That's where the Style Scores come in.
To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Southwest Airlines (LUV - Free Report) Based in Dallas, TX, Southwest Airlines is a passenger airline that provides scheduled air transportation in the United States and 'ten near-international' markets. The company was incorporated in Texas in 1967 and commenced operations in 1971 with three Boeing 737 jets serving the cities of Dallas, Houston and San Antonio.
LUV is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.
It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 15.11; value investors should take notice.
Seven analysts revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.33 to $3.17 per share. LUV also boasts an average earnings surprise of +247%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, LUV should be on investors' short list.
DALLAS, July 13, 2026 /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) invites you to listen to a live webcast of its first quarter 2026 financial results. Details are as follows:
To access the live audio webcast and subsequent replay, click on the link above, or go to www.southwest.com and click on "Investor Relations" under the "About Southwest" menu at the bottom of the page. The audio webcast can be found on the homepage or by clicking "Calendar" under the "News & Events" header. Registration for this event begins 20 minutes prior to the start of the call.
It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.
Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.
It also includes access to the Zacks Style Scores.
What are the Zacks Style Scores? The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.
Growth ScoreGrowth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.
Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.
VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.
How Style Scores Work with the Zacks Rank The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.
It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.94% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.
That's where the Style Scores come in.
You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.
The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.
A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Southwest Airlines (LUV - Free Report) Based in Dallas, TX, Southwest Airlines is a passenger airline that provides scheduled air transportation in the United States and 'ten near-international' markets. The company was incorporated in Texas in 1967 and commenced operations in 1971 with three Boeing 737 jets serving the cities of Dallas, Houston and San Antonio.
LUV is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.
Momentum investors should take note of this Transportation stock. LUV has a Momentum Style Score of A, and shares are up 23.9% over the past four weeks.
For fiscal 2026, three analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.25 to $3.02 per share. LUV boasts an average earnings surprise of +247%.
With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, LUV should be on investors' short list.
Defense spending is surging while airline profits are under pressure. The choice between these two funds comes down to which story you believe in more.
