CHICAGO: Southwest Airlines has sharply cut its annual profit forecast, as surging fuel costs continue to overshadow gains from higher airfares and a business overhaul.
The Dallas-based carrier expects adjusted earnings of US$2.60 to US$2.85 per share in 2026, down from its earlier forecast of US$3.25 to US$4.25.
The midpoint of the new range is below analysts’ average estimate of US$2.85 per share, according to data compiled by LSEG.
Southwest also forecast fourth-quarter (4Q) earnings below Wall Street expectations, underscoring the challenge facing US airlines as rising fuel costs eat into revenue from sharply higher airfares.
The carrier, once known for its free checked bags and open seating, has been overhauling its business to attract higher-spending travellers and generate more revenue through new products and fees.
Southwest’s results offer an early test of those efforts.
The airline is collecting substantially more revenue even as it carries fewer travellers. The fuel shock, however, is making it harder to gauge how much of those gains will translate into profit.
Southwest’s average passenger fare jumped nearly 27% in the 3Q, helping lift revenue to a 3Q record of US$8.4bil. — Reuters
