Southwest Airlines (LUV) Q4 2025 earnings

Southwest Airlines The airline on Wednesday forecast a 2026 profit increase well above analysts’ expectations, as the company overhauls its half-century-old business model to include new money makers like bag fees and seat assignment.

The airline expects to earn at least $4 adjusted per share this year, exceeding the $3.19 that analysts expected, according to LSEG estimates. It also expects capacity growth of 2% to 3% compared to 2025, which could nearly double last year’s capacity expansion.

“We wanted to give a little more time before we give the upper end of those forecasts just to let more information in” about the new initiatives, CFO Tom Doxey said in an interview on Wednesday. He said demand for travel was strong.

Southwest stock rose more than 5% in after-market trading following the company’s report.

In the first quarter, Southwest said it expects revenue per seat per mile to rise 9.5%, above analysts’ expectations of 8.5%. The carrier forecast adjusted earnings of 45 cents for the first quarter, above Wall Street’s forecast of 33 cents.

“Despite the impact of Winter Storm Fern, 2026 is off to a strong start, driven by the company’s customer-focused product offerings, operational excellence, and significant progress from the transformational initiatives implemented last year,” CEO Bob Jordan said in an earnings release. The sprawling winter storm forced airlines to cancel thousands of flights, despite their competition in Southwest Texas American Airlines It has particularly struggled to recover from the effects of the weather.

Here’s how the company performed in the fourth quarter compared to Wall Street expectations, according to LSEG consensus estimates:

• EPS: 58 cents was revised versus 58 cents expected
• profit: $7.44 billion versus $7.51 billion expected

Southwest has spent much of the past two years making sweeping changes to its business model, including ending its open boarding policy and moving this week to assigned seating, which comes with additional fees for certain places, including a new extra legroom section.

Last year, the airline began charging customers for checked bags for the first time ever and launched basic economy fares. These long-standing policies make the industry stand out like its competitors as the airline faces pressure to improve profits.

“We’re not finished yet,” Doxey said Wednesday of the airline’s initiatives. Transport company executives have previously discussed the possibility of undertaking other projects. Southwest is exploring airport lounges, Jordan said in an interview last month.

Southwest executives are scheduled to face questions from investors on a call Thursday morning about the cost of the storm, new revenue streams and earnings growth in the coming years, beyond the rise in sales since its debut.

Southwest’s fourth-quarter net income rose nearly 24% from a year earlier to $323 million, while revenue rose 7.4% to $7.44 billion. Adjusting for one-time items including the reorganization, Southwest reported earnings of $301 million, or 58 cents per share, down from $356 million, or 56 cents per share, a year earlier.