Southwest (NYSE: LUV) returns to profit with record Q1 2026 revenue
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Southwest Airlines reported a solid turnaround in first quarter 2026, posting net income of $227 million and diluted EPS of $0.45, compared with a loss a year earlier. Operating revenue reached $7.2 billion, up 12.8%, and operating margin improved to 4.6%, an 8.1‑point gain.
The company generated $1.4 billion in operating cash flow and returned over $1.3 billion to shareholders through buybacks and dividends. Record first‑quarter passenger and operating revenues, double‑digit unit revenue growth, and disciplined cost control offset significantly higher fuel costs of $2.73 per gallon.
For second quarter 2026, Southwest guides adjusted EPS to $0.35–$0.65, with unit revenues (RASM) expected to rise 16.5%–18.5% year over year and CASM‑X up 3.5%–4.0%. Management is maintaining a full‑year adjusted EPS goal of $4.00, contingent on fuel prices and revenue performance.
Positive
- Strong earnings turnaround and margin expansion: Q1 2026 revenue rose 12.8% to $7.249B, net income reached $227M versus a prior‑year loss, and operating margin improved by 8.1 points to 4.6%, demonstrating the payoff from Southwest’s transformation initiatives.
Negative
- None.
Insights
Southwest swings back to profit on record revenue and stronger margins.
Southwest Airlines delivered a notable earnings recovery in Q1 2026. Operating revenue rose to $7.249B, up 12.8%, while net income reached $227M versus a loss last year. Operating margin improved to 4.6%, aided by double‑digit unit revenue growth.
The company held cost growth well below revenue growth, with operating expenses up 4.0% and CASM‑X up only 2.3% on modest capacity expansion. This helped offset fuel at $2.73 per gallon, above prior guidance and a meaningful headwind to EPS.
Guidance points to continued strength: Q2 2026 adjusted EPS is forecast at $0.35–$0.65, with RASM up 16.5%–18.5% year over year. Management is reiterating a $4.00 full‑year adjusted EPS target, which assumes supportive fuel and revenue conditions based on the current environment disclosed for 2026.
8-K Event Classification
6 items: 0.16, 1.5, 2.02, 3.1, 4.6, 9.01
6 items
Item 0.16
Item 0.16
Item 1.5
Item 1.5
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 3.1
Item 3.1
Item 4.6
Item 4.6
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Q1 2026 Operating Revenue: $7.249B
Q1 2026 Net Income: $227M
Q1 2026 Diluted EPS: $0.45
+5 more
8 metrics
Q1 2026 Operating Revenue
$7.249B
Total operating revenues, up 12.8% year over year
Q1 2026 Net Income
$227M
Net income versus a $149M loss in Q1 2025
Q1 2026 Diluted EPS
$0.45
Diluted earnings per share, up from ($0.26) prior year
Q1 2026 Operating Margin
4.6%
Operating margin, improved by 8.1 points year over year
Q1 2026 Operating Cash Flow
$1.418B
Net cash provided by operating activities, up from $860M
Fuel Cost per Gallon Q1 2026
$2.73
Fuel costs per gallon including tax, 9.6% higher year over year
Q2 2026 Adjusted EPS Guidance
$0.35–$0.65
Forecast adjusted EPS range based on April 16 fuel curve
Cash and Equivalents
$3.328B
Cash and cash equivalents as of March 31, 2026
Key Terms
RASM, CASM-X, Adjusted EBITDAR, load factor, +2 more
6 terms
RASM financial
"First quarter 2026 RASM increased 11.2 percent year-over-year, above prior guidance"
RASM (revenue per available seat mile) measures how much money an airline earns for each seat it can fly one mile, combining ticket sales and other onboard revenue divided by total seat-miles offered. It tells investors how effectively an airline turns its flying capacity into income—similar to checking how much a restaurant makes per available table hour—so rising RASM usually signals better pricing or demand, while falling RASM can warn of weaker revenue performance.
CASM-X financial
"First quarter 2026 CASM-X increased 2.3 percent year-over-year, below prior guidance"
Adjusted EBITDAR financial
"Adjusted EBITDAR is calculated as earnings before interest and taxes... and the fixed portion of operating lease expense"
Adjusted EBITDAR is a company’s reported profit measure that starts with operating earnings and then adds back interest, taxes, depreciation, amortization and rent, plus any one‑time items companies exclude. It aims to show how much cash a business generates from its core operations before the costs of financing, non‑cash accounting charges and property leases, like comparing two stores’ underlying sales by ignoring rent and loan payments. Investors use it to compare operating performance across firms and assess ability to cover fixed obligations, but companies may calculate it differently, so comparisons require caution.
load factor financial
"Load factor (c) | 74.1 % | | 73.9 % | | 0.2 pts."
Load factor is a measure of how efficiently a transportation service, such as a plane, train, or bus, fills its available seats or space over a period of time. It is calculated by dividing the actual number of passengers or usage by the total available capacity. A higher load factor indicates better utilization, which can lead to more profitable operations and is important for investors assessing the efficiency and profitability of transportation companies.
available seat miles financial
"Available seat miles (ASMs) (in millions) (b) | 42,049 | | 41,432"
Available seat miles measure the total capacity of an airline to carry passengers, calculated by multiplying the number of seats available on all flights by the distance those flights cover. It indicates how much space an airline has to generate revenue from passenger travel. For investors, higher available seat miles generally suggest a larger operation and potential for increased earnings.
Earnings Snapshot
Operating Revenue: $7.249B · Guidance included
Q1 2026
Operating Revenue
$7.249B
+12.8% YoY
Net Income
$227M
vs. $149M loss YoY
Diluted EPS
$0.45
vs. ($0.26) YoY
Operating Margin
4.6%
+8.1 pts YoY
Guidance
For Q2 2026, Southwest guides adjusted EPS to $0.35–$0.65, with RASM up 16.5%–18.5% and CASM-X up 3.5%–4.0% year over year; it maintains a full-year adjusted EPS goal of $4.00, dependent on fuel prices and revenue performance.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 22, 2026
| (Exact name of registrant as specified in its charter) | ||
| (State or other jurisdiction | (Commission | (I.R.S. Employer | ||||||||||||
| of incorporation) | File Number) | Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
Registrant's telephone number, including area code: (214 ) 792-4000
| Not Applicable | ||
| (Former name or former address, if changed since last report) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
(17 CFR 230.425)
CFR 240.14a-12)
Exchange Act (17 CFR 240.14d-2(b))
Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 22, 2026, the Registrant issued a press release (the "Earnings Press Release") announcing its financial results for first quarter 2026. The Earnings Press Release is furnished herewith as Exhibit 99.1 and is incorporated by reference into this Item 2.02.
The information furnished in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
99.1 Registrant’s Earnings Release.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SOUTHWEST AIRLINES CO. | ||||||||
| April 22, 2026 | By: | /s/ Tom Doxey | ||||||
| Tom Doxey | ||||||||
| Executive Vice President & Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
SOUTHWEST AIRLINES REPORTS FIRST QUARTER RESULTS,
BUSINESS TRANSFORMATION INITIATIVES DELIVER MEANINGFUL MARGIN EXPANSION
$227 million net income and $0.45 EPS, in line with guidance
Operating margin of 4.6%, an improvement of 8.1 points year-over-year
Generated $1.4 billion in operating cash flow in the quarter
Record first‑quarter passenger, operating, and unit revenues
Managed business revenue performance a March and quarterly record
DALLAS, TEXAS - April 22, 2026 - Southwest Airlines Co. (NYSE:LUV) today reported first quarter 2026 financial results, representing an important milestone as the transformational plan announced just 18 months ago is now fully implemented.
“First quarter 2026 marked a turning point for Southwest, as our broad set of commercial, operational, and cost initiatives is now translating into terrific results. Demand for our new product offerings drove record first quarter revenues, double‑digit unit revenue growth, and significant improvement in earnings and margins. These results were achieved despite significantly higher fuel costs, underscoring the momentum across the business and the strength of our transformed business model.
"Our Customers have embraced and value our new products, and that is reflected in our financial performance. Demand continues to be strong, and we remain focused on controlling what we can control by managing costs, optimizing revenue initiatives, and directing capacity toward higher‑return opportunities. While the external environment remains uncertain, we are confident in our positioning and the strong momentum we are seeing at Southwest,” said Bob Jordan, Southwest’s President & Chief Executive Officer.
1Q Highlights:
•Operating revenues of $7.2 billion, a first-quarter record, up 12.8% year-over-year
•Net income of $227 million, or $0.45 diluted earnings per share, and an adjusted net margin1 expected to be the highest among large U.S. airlines
•Operating margin of 4.6%, an improvement of 8.1 points and 6.6 points adjusted1, both year-over-year
•Generated operating cash flow of $1.4 billion, an increase of 65% from the first quarter of 2025
•Strong cost discipline continued in the quarter, with operating expenses increasing 4.0% and unit costs (CASM-X1) increasing 2.3% on capacity growth of 1.5%, all year-over-year
1
•Returned over $1.3 billion to Shareholders through a combination of share repurchases and dividends
•Drove strong Customer buy‑up, with approximately 60% of Customers upgrading from the base product in first quarter 2026, up from approximately 20% in 2025
•Rapid Rewards engagement strengthened, with enrollments up 37% and tier‑status earners increasing 62%, both year-over-year
•Managed business revenue delivered its strongest March and quarterly performances in Company history, increasing 25% and 16%, respectively, year-over-year
•Successfully launched assigned and extra legroom seating on January 27, 2026, while achieving best‑in‑class on‑time performance and the highest completion factor among large domestic airline peers on the day of launch
•Continued fleet upgrades with in‑seat power and larger overhead bins, with approximately two thirds of aircraft expected to be equipped with both features by late 2026
•Announced planned deployment of Starlink ultra‑fast Wi‑Fi across the fleet, with initial aircraft expected to enter service in summer 2026 and at least 300 aircraft planned by year‑end 2026
•Entered a new strategic partnership with All Nippon Airways, expanding the Company’s global network to seven partners
•Commenced service in St. Thomas, U.S. Virgin Islands and Knoxville, Tennessee, two of five new market entries in 2026
2
Guidance and Outlook:
The following table provides guidance for second quarter 2026. The Company is guiding adjusted EPS1,2,3 to be in the range of $0.35 to $0.65, based on the forward fuel curve as of April 16, and the current demand and revenue environment. Given the ongoing macroeconomic uncertainty, updating the Company's full-year adjusted EPS guidance of $4.00 would not be productive at this time. Achieving this outcome would require lower fuel prices and/or stronger revenue performance to offset higher fuel expense. The Company expects to provide updates to this guidance as appropriate.
| 2Q 2026 Forecast | ||||||||
| Adjusted EPS | $0.35 to $0.65 | |||||||
| ASMs (a), year-over-year | Flat to up 1.0% | |||||||
| RASM (b), year-over-year | 16.5% to 18.5% | |||||||
CASM-X (c), year-over-year1,3 | 3.5% to 4.0% | |||||||
(a) Available seat miles ("ASMs" or "capacity").
(b) Operating revenue per available seat mile ("RASM" or "unit revenues").
(c) Operating expenses per available seat mile, excluding aircraft fuel and related taxes expense, special items, and profit sharing ("CASM-X").
3
Revenue Results and Outlook:
•Record first quarter 2026 passenger revenues of $6.6 billion, a 13.4 percent increase year-over-year
•Record first quarter 2026 operating revenues of $7.2 billion, a 12.8 percent increase year-over-year
•First quarter 2026 RASM increased 11.2 percent year-over-year, above prior guidance, on capacity up 1.5 percent, reflecting initiative contributions and broad-based demand strength across the network
•Second quarter 2026 RASM is expected to increase between 16.5% and 18.5% year-over year
Non-Fuel Costs and Outlook:
•First quarter 2026 operating expenses increased 4.0 percent year-over-year, to $6.9 billion
•First quarter 2026 operating expenses, excluding aircraft fuel and related taxes expense, special items, and profit sharing1, increased 3.9 percent year-over-year
•First quarter 2026 CASM-X increased 2.3 percent year-over-year, below prior guidance
•Second quarter 2026 CASM-X is expected to increase between 3.5% and 4.0% year-over-year, which includes an expected 1.2 point impact from the removal of six seats from the Boeing 737-700 fleet to enable extra legroom seating
Fuel Costs:
•First quarter 2026 fuel costs were $2.73 per gallon, above prior guidance of approximately $2.40, which increased fuel expense by $164 million and represented an approximate $0.22 headwind to EPS
•Second quarter 2026 fuel cost per gallon is assumed to be between $4.10 and $4.154 based on the forward curve as of April 16
Capacity, Fleet, and Capital Spending:
•First quarter 2026 capacity increased 1.5 percent year-over-year
•Received 10 Boeing 737-8 aircraft and retired 13 aircraft (including eight Boeing 737-700 aircraft and the sale of three Boeing 737-700 aircraft and two Boeing 737-800 aircraft) in first quarter 2026, ending the quarter with 800 aircraft
•First quarter 2026 gross capital expenditures were $630 million, driven primarily by aircraft-related capital spending, as well as technology, facilities, and operational investments
•Expect 66 Boeing 737-8 aircraft deliveries and plan to retire approximately 60 aircraft in 2026
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•Continued efforts to optimize the network, including announcing the suspension of operations at Chicago O’Hare and Washington Dulles in June and the reallocation of capacity to higher-performing markets
•Entered 2026 with a disciplined capacity plan and now expect full-year growth of approximately 2%, at the low end of the prior 2% to 3% guide year-over-year
•Expect 2026 net capital spending5 in the range of $3.0 billion to $3.5 billion
Liquidity and Capital Deployment:
•Ended first quarter 2026 with $3.3 billion in cash and cash equivalents and a revolving credit line of $1.5 billion
•Ended the quarter with leverage1,6 of 2.2x
•Have unencumbered aircraft and other related assets with a net book value of approximately $16.5 billion
•Repurchased $1.25 billion in shares and distributed $93 million in dividends during first quarter 2026
•$450 million remains outstanding under the Company's $2.0 billion share repurchase authorization
•Entered into a $500 million aircraft-secured term loan agreement used to pay down final portion of the Company's Payroll Support Program loan
5
Conference Call:
Southwest will discuss its first quarter 2026 results on a conference call at 10:00 a.m. Eastern Time on April 23, 2026. To listen to a live broadcast of the conference call, please go to
https://www.southwestairlinesinvestorrelations.com.
Footnotes
1See Note Regarding Use of Non-GAAP Financial Measures for additional information on special items. In addition, information regarding special items and economic results is included in the accompanying table Reconciliation of Reported Amounts to Non-GAAP Items (also referred to as "excluding special items").
2Adjusted income (loss) per share, or adjusted EPS, a non-GAAP financial measure, is calculated as net income (loss), excluding special items, divided by diluted weighted-average shares outstanding.
3Projections do not reflect the potential impact of Aircraft fuel and related taxes expense, special items, and profit sharing because the Company cannot reliably predict or estimate those items or expenses or their impact to its financial statements in future periods, especially considering the significant volatility of the Aircraft fuel and related taxes expense line item. Accordingly, the Company believes a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures for these projected results is not meaningful or available without unreasonable effort.
4Based on market prices as of April 16, 2026. Fuel cost per gallon includes fuel taxes and fuel hedging net premium expense of $0.05 per gallon related to terminated fuel derivative contracts.
5Net capital expenditures include the impact of aircraft sales and sale-leaseback transactions.
6Leverage, adjusted debt, and adjusted EBITDAR are each non-GAAP financial measures. Leverage is calculated as adjusted debt divided by trailing twelve month adjusted EBITDAR. Adjusted EBITDAR is calculated as earnings before interest and taxes, and non-operating other (gains) losses, net, excluding special items, and adjusted by adding depreciation and amortization and the fixed portion of operating lease expense ("adjusted EBITDAR"). Adjusted debt includes current and long-term debt, finance lease obligations, and operating lease liabilities (including fleet, ground, and other).
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company's financial and operational outlook, expectations, goals, plans, targets, and projected results of operations, including with respect to its initiatives, and including factors and assumptions underlying the Company's expectations and projections; (ii) the Company’s initiatives, strategic priorities and focus areas, goals, and opportunities, including with respect to the Company’s transformational plan, product offering, positioning, and strong momentum; (iii) the Company’s capacity plans and expectations; (iv) the Company's expectations with respect to fuel costs and fuel efficiency, including factors underlying the Company's expectations; (v) the Company’s expectations with respect to managing costs, optimizing revenue initiatives, and directing capacity toward higher‑return opportunities; (vi) the Company’s network plans and expectations, including with respect to optimization efforts; (vii) the Company’s expectations with respect to the current demand and revenue environment; (viii) the Company’s plans and expectations with respect to Starlink Wi-Fi; (ix) the Company’s fleet plans and expectations, including with respect to its fleet order book, fleet utilization, fleet upgrades with in-seat power and larger overhead bins, fleet modernization, fleet transactions, flexibility, and expected fleet deliveries and retirements, and including factors and assumptions underlying the Company's plans and expectations; and (x) the Company's plans, estimates, and assumptions related to capital spending, including factors and assumptions underlying the Company's expectations and projections. These forward-looking statements are based on the Company's current estimates, intentions, beliefs, expectations, goals, strategies, and projections for the future and are not guarantees of future performance. Forward-looking statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the impact of geopolitical conflicts, fears or actual outbreaks of diseases, extreme or severe weather and natural disasters, actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities), governmental actions, consumer perception, consumer uncertainties with respect to trade policies or government shutdowns (including the imposition of tariffs), economic conditions, banking conditions, fears or actual acts of terrorism or war, sociodemographic trends, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (ii) the Company's ability to timely and effectively implement, transition, operate, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives, including with respect to revenue management and assigned and premium seating; (iii) consumer behavior and response with respect to the Company's new commercial products and policies; (iv) the impact of fuel price changes, fuel price
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volatility, and fuel availability on the Company's business plans and results of operations; (v) the impact of governmental regulations and other governmental actions, including with respect to government shutdowns, as well as the Company’s ability to obtain any required governmental approvals, on the Company's business plans, results, and operations; (vi) the Company's dependence on The Boeing Company (“Boeing”) and Boeing suppliers with respect to the Company's aircraft deliveries, Boeing MAX 7 aircraft certifications, fleet and capacity plans, operations, maintenance, strategies, and goals; (vii) the Company's dependence on the Federal Aviation Administration with respect to, among other things, the certification of the Boeing MAX 7 aircraft; (viii) the Company's dependence on other third parties, in particular with respect to its technology plans, its plans and expectations related to revenue management, online travel agencies, operational reliability, fuel supply, maintenance, Global Distribution Systems, environmental sustainability, and the impact on the Company's operations and results of operations of any third-party delays or nonperformance; (ix) the Company’s ability to timely and effectively prioritize its initiatives and focus areas and related expenditures; (x) the impact of labor matters on the Company's business decisions, plans, strategies, and results; (xi) the Company's ability to obtain and maintain adequate infrastructure and equipment to support its operations and initiatives; (xii) the Company's dependence on its workforce, including its ability to employ and retain sufficient numbers of qualified Employees with appropriate skills and expertise to effectively and efficiently maintain its operations and execute the Company’s plans, strategies, and initiatives; (xiii) the cost and effects of the actions of activist shareholders; and (xiv) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Investor Contact:
Southwest Airlines Investor Relations
investor.relations@wnco.com
Media Contact:
Southwest Airlines Media Relations
214-792-4847
swamedia@wnco.com
SW-QFS
7
Southwest Airlines Co.
Condensed Consolidated Statement of Income (Loss)
(in millions, except per share amounts)
(unaudited)
| Three months ended | ||||||||||||||||||||
| March 31, | ||||||||||||||||||||
| 2026 | 2025 | Percent Change | ||||||||||||||||||
| OPERATING REVENUES: | ||||||||||||||||||||
| Passenger | $ | 6,591 | $ | 5,811 | 13.4 | |||||||||||||||
| Freight | 44 | 41 | 7.3 | |||||||||||||||||
| Other | 614 | 576 | 6.6 | |||||||||||||||||
| Total operating revenues | 7,249 | 6,428 | 12.8 | |||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||||||
| Salaries, wages, and benefits | 3,297 | 3,102 | 6.3 | |||||||||||||||||
Aircraft fuel and related taxes | 1,356 | 1,249 | 8.6 | |||||||||||||||||
| Maintenance materials and repairs | 259 | 292 | (11.3) | |||||||||||||||||
| Landing fees and airport rentals | 572 | 522 | 9.6 | |||||||||||||||||
| Depreciation and amortization | 398 | 396 | 0.5 | |||||||||||||||||
| Other operating expenses | 1,037 | 1,090 | (4.9) | |||||||||||||||||
| Total operating expenses | 6,919 | 6,651 | 4.0 | |||||||||||||||||
OPERATING INCOME (LOSS) | 330 | (223) | n.m. | |||||||||||||||||
| NON-OPERATING EXPENSES (INCOME): | ||||||||||||||||||||
| Interest expense | 54 | 46 | 17.4 | |||||||||||||||||
| Capitalized interest | (12) | (11) | 9.1 | |||||||||||||||||
| Interest income | (23) | (84) | (72.6) | |||||||||||||||||
| Other (gains) losses, net | 26 | 18 | 44.4 | |||||||||||||||||
Total non-operating expenses (income) | 45 | (31) | n.m. | |||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 285 | (192) | n.m. | |||||||||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 58 | (43) | n.m. | |||||||||||||||||
NET INCOME (LOSS) | $ | 227 | $ | (149) | n.m. | |||||||||||||||
NET INCOME (LOSS) PER SHARE: | ||||||||||||||||||||
| Basic | $ | 0.45 | $ | (0.26) | n.m. | |||||||||||||||
| Diluted | $ | 0.45 | $ | (0.26) | n.m. | |||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||||||||||
| Basic | 498 | 584 | (14.7) | |||||||||||||||||
| Diluted | 503 | 584 | (13.9) | |||||||||||||||||
8
Southwest Airlines Co.
Reconciliation of Reported Amounts to Non-GAAP Financial Measures (excluding special items)
(See Note Regarding Use of Non-GAAP Financial Measures)
(in millions, except per share and per ASM amounts) (unaudited)
| Three months ended | ||||||||||||||||||||
| March 31, | Percent | |||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| Aircraft fuel and related taxes, unhedged | $ | 1,327 | $ | 1,212 | ||||||||||||||||
(a) | Add: Premium cost of fuel contracts designated as hedges | 29 | 37 | |||||||||||||||||
| Aircraft fuel and related taxes, as reported (and economic) | $ | 1,356 | $ | 1,249 | 8.6 | |||||||||||||||
| Total operating expenses, as reported | $ | 6,919 | $ | 6,651 | ||||||||||||||||
| Deduct: Litigation accruals | — | (19) | ||||||||||||||||||
| Deduct: Transformation costs | — | (14) | ||||||||||||||||||
(b) | Deduct: Severance and related costs | — | (62) | |||||||||||||||||
| Total operating expenses, excluding special items | $ | 6,919 | $ | 6,556 | 5.5 | |||||||||||||||
| Deduct: Aircraft fuel and related taxes expense, excluding special items (economic) | (1,356) | (1,249) | ||||||||||||||||||
| Operating expenses, excluding Aircraft fuel and related taxes expense and special items | $ | 5,563 | $ | 5,307 | 4.8 | |||||||||||||||
| Deduct: Profit-sharing expense | (50) | — | ||||||||||||||||||
| Operating expenses, excluding Aircraft fuel and related taxes expense, special items, and profit sharing | $ | 5,513 | $ | 5,307 | 3.9 | |||||||||||||||
| Operating income (loss), as reported | $ | 330 | $ | (223) | ||||||||||||||||
| Add: Litigation accruals | — | 19 | ||||||||||||||||||
| Add: Transformation costs | — | 14 | ||||||||||||||||||
(b) | Add: Severance and related costs | — | 62 | |||||||||||||||||
| Operating income (loss), excluding special items | $ | 330 | $ | (128) | n.m. | |||||||||||||||
Total operating revenues, as reported | $ | 7,249 | $ | 6,428 | ||||||||||||||||
Operating margin, as reported | 4.6 | % | (3.5) | % | 8.1 pts. | |||||||||||||||
Add: Impact of special items | — | 1.5 | % | |||||||||||||||||
Operating margin, excluding special items | 4.6 | % | (2.0) | % | 6.6 pts. | |||||||||||||||
| Income (loss) before income taxes, as reported | $ | 285 | $ | (192) | ||||||||||||||||
| Add: Litigation accruals | — | 19 | ||||||||||||||||||
| Add: Transformation costs | — | 14 | ||||||||||||||||||
(b) | Add: Severance and related costs | — | 62 | |||||||||||||||||
| Income (loss) before income taxes, excluding special items | $ | 285 | $ | (97) | n.m. | |||||||||||||||
| Provision (benefit) for income taxes, as reported | $ | 58 | $ | (43) | ||||||||||||||||
(c) | Add: Net loss tax impact of fuel and special items | — | 23 | |||||||||||||||||
| Provision (benefit) for income taxes, net, excluding special items | $ | 58 | $ | (20) | n.m. | |||||||||||||||
| Net income (loss), as reported | $ | 227 | $ | (149) | ||||||||||||||||
| Add: Litigation accruals | — | 19 | ||||||||||||||||||
| Add: Transformation costs | — | 14 | ||||||||||||||||||
9
(b) | Add: Severance and related costs | — | 62 | |||||||||||||||||
(c) | Deduct: Net loss tax impact of special items | — | (23) | |||||||||||||||||
| Net income (loss), excluding special items | $ | 227 | $ | (77) | n.m. | |||||||||||||||
Total operating revenues, as reported | $ | 7,249 | $ | 6,428 | ||||||||||||||||
Net margin, as reported | 3.1 | % | (2.3) | % | 5.4 pts. | |||||||||||||||
Add: Impact of special items | — | 1.5 | % | |||||||||||||||||
(c) | Deduct: Net loss tax impact of special items | — | (0.4) | % | ||||||||||||||||
Net margin, excluding special items | 3.1 | % | (1.2) | % | 4.3 pts. | |||||||||||||||
| Net income (loss) per share, diluted, as reported | $ | 0.45 | $ | (0.26) | ||||||||||||||||
| Add: Impact of special items | — | 0.16 | ||||||||||||||||||
(c) | Deduct: Net loss tax impact of special items | — | (0.03) | |||||||||||||||||
| Net income (loss) per share, diluted, excluding special items | $ | 0.45 | $ | (0.13) | n.m. | |||||||||||||||
| Operating expenses per ASM (cents) | ¢ | 16.46 | ¢ | 16.05 | ||||||||||||||||
| Deduct: Impact of special items | — | (0.23) | ||||||||||||||||||
| Deduct: Aircraft fuel and related taxes expense divided by ASMs | (3.23) | (3.01) | ||||||||||||||||||
| Deduct: Profit-sharing expense divided by ASMs | (0.12) | — | ||||||||||||||||||
| Operating expenses per ASM, excluding Aircraft fuel and related taxes expense, special items, and profit sharing (cents) | ¢ | 13.11 | ¢ | 12.81 | 2.3 | |||||||||||||||
(a) Includes amounts reclassified from Accumulated other comprehensive income associated with hedges previously terminated.
(b) Represents Employee severance payments and related professional fees resulting from the workforce reduction in February 2025 ($53 million in Salaries, wages, and benefits and $9 million in Other operating expenses).
(c) Tax amounts for each individual special item are calculated at the Company's effective rate for the applicable period and totaled in this line item.
10
Southwest Airlines Co.
Comparative Consolidated Operating Statistics
(unaudited)
Relevant comparative operating statistics for the three months ended March 31, 2026 and 2025 are included below. The Company provides these operating statistics because they are commonly used in the airline industry and, as such, allow readers to compare the Company’s performance against its results for the prior year period, as well as against the performance of the Company’s peers.
| Three months ended | ||||||||||||||||||||
| March 31, | Percent | |||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| Revenue passengers carried (000s) | 29,175 | 29,990 | (2.7) | |||||||||||||||||
| Enplaned passengers (000s) | 37,277 | 37,139 | 0.4 | |||||||||||||||||
| Revenue passenger miles (RPMs) (in millions) (a) | 31,151 | 30,629 | 1.7 | |||||||||||||||||
| Available seat miles (ASMs) (in millions) (b) | 42,049 | 41,432 | 1.5 | |||||||||||||||||
| Load factor (c) | 74.1 | % | 73.9 | % | 0.2 pts. | |||||||||||||||
| Average length of passenger haul (miles) | 1,068 | 1,021 | 4.6 | |||||||||||||||||
| Average aircraft stage length (miles) | 778 | 771 | 0.9 | |||||||||||||||||
| Trips flown | 330,371 | 331,886 | (0.5) | |||||||||||||||||
| Seats flown (000s) (d) | 53,030 | 53,237 | (0.4) | |||||||||||||||||
| Seats per trip (e) | 160.5 | 160.4 | 0.1 | |||||||||||||||||
| Average passenger fare | $ | 225.93 | $ | 193.75 | 16.6 | |||||||||||||||
| Passenger revenue yield per RPM (cents) (f) | 21.16 | 18.97 | 11.5 | |||||||||||||||||
| RASM (cents) (g) | 17.24 | 15.51 | 11.2 | |||||||||||||||||
| PRASM (cents) (h) | 15.68 | 14.02 | 11.8 | |||||||||||||||||
| CASM (cents) (i) | 16.46 | 16.05 | 2.6 | |||||||||||||||||
CASM, excluding fuel (cents) | 13.23 | 13.04 | 1.5 | |||||||||||||||||
| CASM, excluding special items (cents) | 16.46 | 15.82 | 4.0 | |||||||||||||||||
CASM, excluding fuel and special items (cents) | 13.23 | 12.81 | 3.3 | |||||||||||||||||
CASM, excluding fuel, special items, and profit sharing (cents) | 13.11 | 12.81 | 2.3 | |||||||||||||||||
| Fuel costs per gallon, including fuel tax (unhedged) | $ | 2.67 | $ | 2.42 | 10.3 | |||||||||||||||
| Fuel costs per gallon, including fuel tax | $ | 2.73 | $ | 2.49 | 9.6 | |||||||||||||||
| Fuel costs per gallon, including fuel tax (economic) | $ | 2.73 | $ | 2.49 | 9.6 | |||||||||||||||
| Fuel consumed, in gallons (millions) | 496 | 500 | (0.8) | |||||||||||||||||
| Active fulltime equivalent Employees | 73,401 | 71,506 | 2.7 | |||||||||||||||||
| Aircraft at end of period | 800 | 800 | — | |||||||||||||||||
(a) A revenue passenger mile is one paying passenger flown one mile. Also referred to as "traffic," which is a measure of demand for a given period.
(b) An available seat mile is one seat (empty or full) flown one mile. Also referred to as "capacity," which is a measure of supply or the space available to carry passengers in a given period.
(c) Revenue passenger miles divided by available seat miles.
(d) Seats flown is calculated using total number of seats available by aircraft type multiplied by the total trips flown by the same aircraft type during a particular period.
(e) Seats per trip is calculated by dividing seats flown by trips flown.
(f) Calculated as passenger revenue divided by revenue passenger miles. Also referred to as "yield," this is the average cost paid by a paying passenger to fly one mile, which is a measure of revenue production and fares.
(g) RASM (unit revenue) - Operating revenue yield per ASM, calculated as operating revenue divided by available seat miles. Also referred to as "operating unit revenues," this is a measure of operating revenue production based on the total available seat miles flown during a particular period.
(h) PRASM (Passenger unit revenue) - Passenger revenue yield per ASM, calculated as passenger revenue divided by available seat miles. Also referred to as “passenger unit revenues,” this is a measure of passenger revenue production based on the total available seat miles flown during a particular period.
(i) CASM (unit costs) - Operating expenses per ASM, calculated as operating expenses divided by available seat miles. Also referred to as "unit costs" or "cost per available seat mile," this is the average cost to fly an aircraft seat (empty or full) one mile, which is a measure of cost efficiency.
11
Southwest Airlines Co.
Condensed Consolidated Balance Sheet
(in millions)
(unaudited)
| March 31, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 3,328 | $ | 3,231 | |||||||
| Accounts and other receivables | 1,254 | 1,149 | |||||||||
| Inventories of parts and supplies, at cost | 833 | 775 | |||||||||
| Prepaid expenses and other current assets | 554 | 490 | |||||||||
| Total current assets | 5,969 | 5,645 | |||||||||
| Property and equipment, at cost: | |||||||||||
| Flight equipment | 26,254 | 26,293 | |||||||||
| Ground property and equipment | 9,317 | 9,163 | |||||||||
| Deposits on flight equipment purchase contracts | 494 | 401 | |||||||||
| Assets constructed for others | 88 | 88 | |||||||||
| 36,153 | 35,945 | ||||||||||
| Less allowance for depreciation and amortization | 15,777 | 15,700 | |||||||||
| 20,376 | 20,245 | ||||||||||
| Goodwill | 970 | 970 | |||||||||
| Operating lease right-of-use assets | 1,019 | 1,089 | |||||||||
| Other assets | 1,021 | 1,112 | |||||||||
| $ | 29,355 | $ | 29,061 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 2,114 | $ | 1,991 | |||||||
| Accrued liabilities | 2,170 | 2,349 | |||||||||
| Current operating lease liabilities | 300 | 312 | |||||||||
| Air traffic liability | 7,049 | 5,945 | |||||||||
| Current maturities of long-term debt | 851 | 324 | |||||||||
| Total current liabilities | 12,484 | 10,921 | |||||||||
| Long-term debt less current maturities | 4,536 | 4,577 | |||||||||
| Air traffic liability - noncurrent | 1,201 | 1,219 | |||||||||
| Deferred income taxes | 2,353 | 2,289 | |||||||||
| Noncurrent operating lease liabilities | 709 | 768 | |||||||||
| Other noncurrent liabilities | 1,197 | 1,306 | |||||||||
| Stockholders' equity: | |||||||||||
| Common stock | 888 | 888 | |||||||||
| Capital in excess of par value | 4,260 | 4,322 | |||||||||
| Retained earnings | 16,526 | 16,388 | |||||||||
| Accumulated other comprehensive loss | (1) | (24) | |||||||||
| Treasury stock, at cost | (14,798) | (13,593) | |||||||||
| Total stockholders' equity | 6,875 | 7,981 | |||||||||
| $ | 29,355 | $ | 29,061 | ||||||||
12
Southwest Airlines Co.
Condensed Consolidated Statement of Cash Flows
(in millions) (unaudited)
| Three months ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
| Net income (loss) | $ | 227 | $ | (149) | ||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | 398 | 396 | ||||||||||||
| Deferred income taxes | 57 | (43) | ||||||||||||
| Gain on sale-leaseback transactions | — | (3) | ||||||||||||
| Changes in certain assets and liabilities: | ||||||||||||||
| Accounts and other receivables | (93) | 57 | ||||||||||||
| Other assets | (61) | 145 | ||||||||||||
| Accounts payable and accrued liabilities | (79) | (126) | ||||||||||||
| Air traffic liability | 1,086 | 660 | ||||||||||||
| Other liabilities | (77) | (63) | ||||||||||||
| Cash collateral provided to derivative counterparties | — | (22) | ||||||||||||
| Other, net | (40) | 8 | ||||||||||||
| Net cash provided by operating activities | 1,418 | 860 | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
| Capital expenditures | (630) | (527) | ||||||||||||
| Proceeds from sale of property and equipment | 192 | 26 | ||||||||||||
| Proceeds from sale-leaseback transactions | — | 24 | ||||||||||||
| Purchases of short-term investments | — | (51) | ||||||||||||
| Proceeds from sales of short-term and other investments | — | 1,154 | ||||||||||||
| Other, net | (7) | (3) | ||||||||||||
| Net cash provided by (used in) investing activities | (445) | 623 | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
| Proceeds from issuance of long-term debt | 500 | — | ||||||||||||
| Proceeds from Employee stock plans | 16 | 17 | ||||||||||||
| Repurchase of common stock | (1,250) | (750) | ||||||||||||
| Payments of long-term debt and finance lease obligations | (6) | (5) | ||||||||||||
| Payments of cash dividends | (93) | (107) | ||||||||||||
| Other, net | (43) | (13) | ||||||||||||
| Net cash used in financing activities | (876) | (858) | ||||||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 97 | 625 | ||||||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3,231 | 7,509 | ||||||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 3,328 | $ | 8,134 | ||||||||||
13
NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES
The Company's unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP. These GAAP financial statements include (i) unrealized noncash reclassifications, as a result of accounting requirements and elections previously made under accounting pronouncements relating to derivative instruments and hedging and (ii) other charges and benefits the Company considers unusual and/or infrequent in nature and thus may make comparisons to its prior or future performance difficult.
Accordingly, the Company also provides financial information in this filing that was not prepared in accordance with GAAP and should not be considered as a substitute for the information prepared in accordance with GAAP. The Company provides supplemental non-GAAP financial information (also referred to as "excluding special items"). Management believes special items can distort the trends associated with the Company’s ongoing performance. Therefore, management utilizes non-GAAP financial measures to evaluate the Company’s financial performance, anticipate future operating results, and assess trends without the impact of items that can vary significantly from period to period. The following measures are often provided, excluding special items, and are utilized by the Company’s management, analysts, and investors to enhance comparability of year-over-year results, as well as to industry trends: Total operating expenses, non-GAAP; Operating expenses, non-GAAP excluding Aircraft fuel and related taxes expense; Operating expenses, non-GAAP excluding Aircraft fuel and related taxes expense and profit sharing; Operating income (loss), non-GAAP; Income (loss) before income taxes, non-GAAP; Provision (benefit) for income taxes, net, non-GAAP; Net income (loss), non-GAAP; Net income (loss) per share, diluted, non-GAAP; Operating expenses per ASM, non-GAAP, excluding Aircraft fuel and related taxes expense and profit sharing (cents); adjusted operating margin; adjusted net margin; and Adjusted debt to adjusted EBITDAR.
For the periods presented, special items include:
1.Charges associated with tentative litigation settlements regarding paid short-term military leave to certain Employees;
2.Expenses associated with professional advisory fees related to the Company's implementation of its comprehensive transformational plan; and
3.Charges associated with severance, post-employment benefits, and professional fees as a result of the Company's reduction in workforce.
The Company has also provided adjusted debt, adjusted EBITDAR, and adjusted debt to adjusted EBITDAR (leverage), which are non-GAAP measures of financial performance. Management believes these supplemental measures can provide a more accurate view of the Company's leverage and risk, since they consider the Company’s debt and debt-like obligation profile. Leverage ratios are widely used by investors, analysts, and rating agencies in the valuation, comparison, rating, and investment recommendations of companies. Although adjusted debt, adjusted EBITDAR, and leverage ratios are commonly-used financial measures, definitions of each differ; therefore, the Company is providing an explanation of its calculations for non-GAAP adjusted debt and adjusted EBITDAR in the accompanying reconciliation below in order to allow investors to compare and contrast its calculations to the calculations provided by other companies.
14
| March 31, 2026 | |||||
| (in millions) | |||||
| Current maturities of long-term debt, as reported | $ | 851 | |||
| Long-term debt less current maturities, as reported | 4,536 | ||||
| Total debt, including finance leases (A) | 5,387 | ||||
| Add: Current operating lease liabilities, as reported | 300 | ||||
| Add: Noncurrent operating lease liabilities, as reported | 709 | ||||
| Adjusted debt (B) | $ | 6,396 | |||
| Twelve Months Ended | |||||
| March 31, 2026 | |||||
| Net income, as reported (C) | $ | 816 | |||
| Interest expense (income), net of capitalized interest, as reported | (25) | ||||
| Income tax expense (benefit), as reported | 223 | ||||
| Non-operating other (gains) losses, net, as reported | (33) | ||||
| Operating income, as reported | 981 | ||||
| Impact of special items | 16 | ||||
| Operating income, non-GAAP | 997 | ||||
| Depreciation and amortization | 1,563 | ||||
| Fixed portion of operating lease expense | 356 | ||||
| Adjusted EBITDAR (D) | $ | 2,916 | |||
| Total debt to Net income (A/C) | 6.6x | ||||
| Adjusted debt to adjusted EBITDAR (B/D) | 2.2x | ||||
15
FAQ
How did Southwest Airlines (LUV) perform financially in Q1 2026?
Southwest posted net income of $227 million and diluted EPS of $0.45 in Q1 2026. Total operating revenue was $7.249 billion, up 12.8% year over year, reversing a net loss of $149 million in the prior‑year quarter.
What were Southwest Airlines (LUV) key revenue and margin metrics for Q1 2026?
Operating revenue reached a record first‑quarter level of $7.249 billion, including passenger revenue of $6.591 billion. Operating margin improved to 4.6% from a negative 3.5% a year earlier, while RASM increased 11.2% year over year.
What guidance did Southwest Airlines (LUV) provide for Q2 2026 earnings?
Southwest expects adjusted EPS of $0.35 to $0.65 for Q2 2026. The company also forecasts year‑over‑year RASM growth of 16.5%–18.5% and CASM‑X up 3.5%–4.0%, based on the forward fuel curve and current demand environment.
How are Southwest Airlines’ (LUV) costs and fuel expenses trending?
Total operating expenses increased 4.0% year over year to $6.919 billion in Q1 2026. CASM‑X rose 2.3%, while fuel costs averaged $2.73 per gallon, above prior guidance and adding an estimated $164 million to quarterly fuel expense.
What capacity and fleet plans did Southwest Airlines (LUV) outline for 2026?
First‑quarter 2026 capacity, measured in ASMs, increased 1.5% year over year, and the fleet ended the quarter at 800 aircraft. For 2026, Southwest expects about 2% full‑year capacity growth, 66 Boeing 737‑8 deliveries, and roughly 60 aircraft retirements.