Southwest Airlines reported second-quarter results on Wednesday that cleared analyst expectations by a wide margin, driven by record operating revenue, though its outlook for the summer quarter came in below Wall Street forecasts.
The Dallas carrier posted adjusted EPS of 94 cents against a 51-cent consensus estimate, but its third-quarter earnings outlook of 50–75 cents trailed the 82-cent analyst expectation
Mario Tama
Southwest Airlines reported second-quarter results on Wednesday that cleared analyst expectations by a wide margin, driven by record operating revenue, though its outlook for the summer quarter came in below Wall Street forecasts.
The company posted adjusted earnings of 94 cents per share for the three months ended June 30. Analysts had expected 51 cents per share, according to CNBC. On a reported basis, net income rose 9.4% to $233 million, or 47 cents per diluted share, from $213 million a year earlier. Adjusted operating revenue reached $8.7 billion, up 20.3% year-over-year, the highest in company history.
The strong top-line performance came despite a near-$900 million increase in fuel expense. Southwest paid $3.92 per gallon in the quarter, below its prior guidance of $4.10 to $4.15 but sharply higher than the $2.32 per gallon it paid a year earlier. The fuel increase represented a $1.17 headwind to adjusted earnings per share. Tickets averaged $225.61 per passenger, up from $186.65 twelve months prior, a gain of nearly 21%.
Southwest's third-quarter adjusted earnings guidance of 50 to 75 cents per share fell short of the 82-cent consensus among analysts, according to CNBC. On the revenue side, Southwest expects unit revenue to climb between 17.5% and 19.5% from a year ago, while available seat miles will be held to no worse than a 1% decline relative to last summer.
Southwest also revised its full-year adjusted earnings guidance to a range of $3.25 to $4.25 per share, replacing its previous target of at least $4.00. The low end of the new range exceeds the analyst average estimate of $3.17, according to Reuters.
"Second quarter results demonstrate the earnings power of our business. We delivered results well ahead of consensus expectations despite nearly $900 million of additional fuel expense year-over-year," said Chief Executive Officer Bob Jordan in a statement. Chief Financial Officer Tom Doxey said that the demand environment "remains really strong, and that includes domestic."
Other second-quarter highlights included a 30% year-over-year increase in managed business revenue to an all-time quarterly record, and a 35% rise in Rapid Rewards loyalty program enrollments. The program reached nearly 100 million members, also a record. Chase co-branded credit card acquisitions grew 28% year-over-year.
Southwest has undergone significant commercial changes over the past two years, ending its open-seating policy in January 2026, introducing assigned seating and extra legroom options, and restricting its longtime free checked-bag policy to higher-paying customers. The carrier said demand for its enhanced product offering remained strong in the quarter.
The company ended the quarter with $5.3 billion in liquidity, including $3.8 billion in cash, and returned $88 million to shareholders through dividends.
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