Southwest Airlines Slashes Full-Year 2026 Earnings Forecast as Fuel Costs Surge

Southwest Airlines cut its full-year 2026 adjusted earnings forecast on Wednesday, citing a sharp spike in jet fuel prices that is squeezing margins across the U.S. airline industry. The Dallas-based carrier now expects adjusted earnings per share of $2.60 to $2.85 for the year, down from its prior guidance range of $3.25 to $4.25 per share issued in July. The new midpoint of that range matches Wall Street's consensus estimate of $2.85 per share, according to analyst projections compiled by LSEG.

Fuel costs have been a persistent and worsening drag on Southwest throughout 2026. Third-quarter fuel cost came in at $3.92 per gallon, above the airline's own assumptions of $3.70 to $3.75 per gallon, adding $821 million to fuel expense compared with the same period a year earlier and creating a $1.08 headwind to adjusted earnings per share in the quarter alone. The carrier is projecting fourth-quarter fuel costs at approximately $4.55 per gallon based on the forward curve as of October 15. Despite the fuel pressure, Southwest beat third-quarter earnings estimates, posting adjusted earnings of 66 cents per share against a Wall Street consensus of 58 cents.

Southwest is the third major U.S. airline this month to reduce its 2026 profit outlook due to higher fuel prices, underscoring how broadly the fuel shock is hitting the industry. The airline ended the third quarter operating a fleet of 803 aircraft after receiving 20 Boeing 737-8 jets and retiring 20 aircraft during the period.