Southwest Airlines slashes profit outlook as fuel costs climb

Despite the dimmed outlook, the carrier outperformed Wall Street expectations for the third quarter. Southwest posted adjusted earnings of 66 cents per share against an anticipated 58 cents, while revenue reached $8.42 billion, comfortably exceeding the $8.25 billion forecast by LSEG. CEO Bob Jordan attributed this resilience to strong passenger demand, which persisted even as the company navigated the transition away from its historic business model.

To drive revenue growth, Southwest is systematically dismantling the policies that defined its brand for decades. The airline has moved to eliminate its signature open-seating policy and is phasing out the long-standing perk of two free checked bags. By adopting seat assignment fees and baggage charges, the carrier is aligning its operations with the traditional model used by its primary domestic competitors. Jordan maintains that these structural changes, combined with current booking trends, prove the company’s underlying earnings power remains durable despite the volatility of the energy market.