Southwest Airlines Co (NYSE:LUV) shares slipped more than 7% on Thursday as the air carrier posted better than expected third quarter 2025 financial results but cautioned that the US government shutdown could weigh on sales in Q4.
The company reported adjusted earnings per share for the period of $0.11, handily beating the analyst consensus estimate of a loss of $0.03, according to LSEG.
Its revenue for the quarter rose 1% to $6.95 billion, edging past the $6.92 billion Wall Street forecast.
Southwest also said it expects to generate record sales in the final quarter of the year due to better travel demand and higher fares.
The company noted, however, that it anticipates its fourth quarter 2025 unit revenue to be in the range of 1% to 3% higher, compared with a 6% improvement in the year-ago period, which reflects the expected impact of the US government shutdown.
"We quickly implemented many new product attributes and enhancements, and the results are showing—we delivered a profitable quarter, with both unit revenues and unit costs performing better-than-anticipated, are reaffirming our full year 2025 EBIT (earnings before interest and taxes) guidance, and expect meaningful margin expansion in the fourth quarter," Southwest Airlines CEO Bob Jordan said in a statement.