Southwest profit rises, but summer earnings outlook trails Wall Street

Southwest Airlines reported a more than 9% increase in second-quarter profit from a year earlier, but its forecast for the current quarter came in below analyst expectations, according to CNBC. For everyday investors, the report shows the airline is still selling plenty of tickets at higher prices, while fuel costs remain a major drag on what turns into profit.

The Dallas-based carrier said second-quarter revenue rose 16.4% from last year to $8.4 billion. CNBC reported that higher fares have increasingly helped Southwest cover its fuel bill, which rose by almost $900 million in the quarter compared with the same period a year earlier.

Fuel is one of the largest costs for airlines. When jet fuel prices rise, carriers can try to offset that pressure by charging more for tickets, filling more seats, cutting flights, or some mix of those steps. Southwest’s second-quarter results suggest stronger revenue helped absorb part of that cost increase, but the company’s guidance indicates investors should not assume the pressure has gone away.

For the third quarter, Southwest forecast adjusted earnings of 50 cents to 75 cents per share, CNBC reported. Adjusted earnings strip out certain items to give investors a cleaner view of operating performance, though the exact adjustments can vary by company. Analysts surveyed by LSEG had expected 82 cents per share, according to CNBC.

Southwest also projected third-quarter sales growth of 17.5% to 19.5% from a year earlier. That would still represent a sizable revenue increase, but the earnings forecast suggests costs are taking a bigger bite than analysts had modeled.

The company said it expects capacity in the third quarter to be flat to down as much as 1% compared with the same quarter in 2025, according to CNBC. Capacity is airline shorthand for how much flying an airline makes available to customers, usually reflecting seats and scheduled flights. Holding capacity steady or trimming it can help an airline avoid adding too many seats when costs are high or demand is uneven.

Southwest reported adjusted earnings per share of 94 cents for the second quarter, CNBC said. LSEG consensus estimates showed analysts expected 51 cents, though CNBC noted it was not immediately clear whether the company’s figure was directly comparable with that estimate.

Revenue came in at $8.43 billion, compared with the $8.58 billion analysts expected, according to LSEG estimates cited by CNBC. That means Southwest’s sales landed slightly below Wall Street’s target even as revenue grew sharply from last year.

The mixed report gives investors two different signals at once: Southwest is producing higher profit and stronger revenue than a year ago, but its near-term earnings outlook is lighter than analysts expected. The gap matters because airline stocks often trade on expectations for future margins, not just whether planes are full today.

This story draws on original reporting from CNBC.