Southwest Airlines Co (NYSE:LUV) shares added more than 6% after the carrier issued profit guidance for 2026 that significantly exceeded Wall Street expectations.
The Dallas-based airline said it expects to earn at least $4 per share in 2026, well above analysts’ consensus estimate of $3.19 and more than triple its adjusted earnings in 2025.
Southwest also forecast first-quarter adjusted earnings of at least $0.45 per share, compared with Wall Street expectations of $0.33, and projected revenue per available seat mile (RASM) to rise at least 9.5% year over year, outpacing the 8.5% consensus forecast.
Capacity for the full year is expected to grow 2% to 3%, nearly double the expansion rate recorded last year.
Southwest reported mixed results for the fourth quarter of 2025, with earnings slightly above expectations but revenue modestly below estimates.
Adjusted earnings per share (EPS) came in at $0.58, topping consensus forecasts by $0.01, while operating revenue of about $7.4 billion fell short of estimates of $7.5 billion.
The airline said fourth-quarter performance benefited from revenue initiatives and ongoing cost controls, despite disruptions from Winter Storm Fern and year-over-year declines in unit revenue due to regulatory capacity constraints.
Southwest highlighted record Q4 passenger revenue of $6.8 billion, up 7.6% year over year, and record operating revenue of $7.4 billion, up 7.4%.
"Southwest closed 2025 with strong momentum,” Southwest CEO Bob Jordan said in a statement. “Last year we implemented the most ambitious transformation in company history, including bag fees, basic economy fares, assigned and extra legroom seating, Rapid Rewards program optimization, online distribution expansion, and free Wi-Fi for loyalty members.”