Southwest Airlines Q4 Earnings Exceed Expectations
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4h ago
0mins
Source: Benzinga
- Earnings Highlights: Southwest Airlines reported Q4 revenue of $7.44 billion, a 7.4% year-over-year increase, although it fell short of the $7.50 billion consensus; however, the EPS of 58 cents exceeded expectations of 57 cents, indicating strong profitability.
- Outlook Guidance: The company issued a bullish outlook for 2026, projecting Q1 EPS of 45 cents or higher compared to the Street estimate of 34 cents, with full-year EPS guidance exceeding $4, representing over a 300% improvement from the $3.19 estimate.
- Management Commentary: CEO Bob Jordan stated during the conference call that 2026 is expected to be a year of margin expansion and higher earnings than in 2025, while management plans to keep headcount expenses flat at 2025 levels, emphasizing cost control.
- Stock Performance: Southwest Airlines shares surged 15.76% on Thursday, reaching an intraday high of $47.30, surpassing the 52-week high of $45.02, reflecting strong market confidence in the company's growth potential.
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Analyst Views on LUV
Wall Street analysts forecast LUV stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for LUV is 44.21 USD with a low forecast of 34.00 USD and a high forecast of 60.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
14 Analyst Rating
4 Buy
9 Hold
1 Sell
Hold
Current: 40.860
Low
34.00
Averages
44.21
High
60.00
Current: 40.860
Low
34.00
Averages
44.21
High
60.00
About LUV
Southwest Airlines Co. (Southwest) operates Southwest Airlines, a passenger airline that provides scheduled air transportation in the United States and near-international markets. The Company's fare products include four categories: Wanna Get Away, Wanna Get Away Plus, Anytime, and Business Select to provide customers options when choosing a fare. It also offers ancillary services, such as EarlyBird Check-In, Upgraded Boarding, and transportation of pets and unaccompanied minors, in accordance with Southwest’s respective policies. Its Rapid Rewards loyalty program enables program members to earn points for every dollar spent on Southwest base fares, also including purchases paid with LUV Vouchers, gift cards, or flight credit, with no portion of the purchase price paid with Rapid Rewards points. It operates over 803 Boeing 737 aircraft in its fleet and serves 117 destinations in 42 states, the District of Columbia, the Commonwealth of Puerto Rico, and ten near-international countries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Southwest Airlines Q4 Earnings Exceed Expectations
- Earnings Highlights: Southwest Airlines reported Q4 revenue of $7.44 billion, a 7.4% year-over-year increase, although it fell short of the $7.50 billion consensus; however, the EPS of 58 cents exceeded expectations of 57 cents, indicating strong profitability.
- Outlook Guidance: The company issued a bullish outlook for 2026, projecting Q1 EPS of 45 cents or higher compared to the Street estimate of 34 cents, with full-year EPS guidance exceeding $4, representing over a 300% improvement from the $3.19 estimate.
- Management Commentary: CEO Bob Jordan stated during the conference call that 2026 is expected to be a year of margin expansion and higher earnings than in 2025, while management plans to keep headcount expenses flat at 2025 levels, emphasizing cost control.
- Stock Performance: Southwest Airlines shares surged 15.76% on Thursday, reaching an intraday high of $47.30, surpassing the 52-week high of $45.02, reflecting strong market confidence in the company's growth potential.
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Southwest Airlines Introduces Assigned Seating After 54 Years
- Business Model Overhaul: Southwest Airlines has introduced assigned seating for the first time in 54 years, marking a significant shift in its business model aimed at enhancing customer experience and increasing revenue streams.
- Upgraded Profit Forecast: The airline expects adjusted earnings of at least $4 per share in 2026, surpassing analysts' expectations of $3.19, indicating strong growth potential under its new profit-generating strategies.
- Revenue Growth Expectations: Southwest anticipates a 9.5% increase in revenue per seat mile for the first quarter, exceeding the 8.5% forecasted by analysts, reflecting successful adjustments in pricing and ancillary fees.
- Competitive Market Pressures: By implementing baggage fees and assigned seating, Southwest is aligning more closely with its competitors, aiming to enhance profitability in response to increasing competitive pressures within the industry.
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