Southwest Airlines Reports Strong Earnings and Raises 2026 Guidance
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4d ago
0mins
Should l Buy LUV?
Source: seekingalpha
Southwest Airlines' stock rose 3.01% as it reached a 52-week high, reflecting positive investor sentiment following its recent earnings report.
The company reported a net income of $441 million for 2025 and raised its 2026 EPS guidance to at least $4.00, indicating over 300% growth from the previous year. This strong performance is attributed to effective revenue generation and cost control measures, alongside a commitment to enhancing shareholder value through substantial returns. Additionally, BMO upgraded the stock rating from Market Perform to Outperform, further boosting market confidence.
The implications of these results suggest that Southwest Airlines is well-positioned for future growth, with its strategic transformations and operational efficiencies likely to attract more investor interest and strengthen its competitive position in the airline industry.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy LUV?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on LUV
Wall Street analysts forecast LUV stock price to fall 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: 52.510
Low
34.00
Averages
44.21
High
60.00
Current: 52.510
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.
American Airlines Faces Challenges in Turnaround Efforts
- Leadership Scrutiny: Pilot and flight attendant unions have raised concerns about CEO Robert Isom's leadership, citing underperformance in financial and operational metrics that have led to reduced profit-sharing for employees, negatively impacting morale.
- Profitability Decline: American Airlines reported a profit of $111 million in 2025, which pales in comparison to Delta Air Lines' $5 billion and United Airlines' $3.3 billion profits, highlighting a significant gap in market competitiveness.
- Transformation Strategy: Isom has outlined a strategy focused on enhancing customer service and revenue management, expressing optimism for 2026 despite challenges posed by winter storms, and emphasizing the need for accountability from senior leadership and teamwork.
- Intensified Market Competition: American Airlines faces fierce competition at major hubs like Chicago and Charlotte, particularly against United Airlines, with analysts questioning whether the current strategy will effectively close the performance gap with peers, indicating a long road ahead for transformation.
See More
American Airlines Profits Lag Behind Rivals Significantly
- Profit Comparison: American Airlines reported only $111 million in profit last year, significantly trailing Delta Air Lines' $5 billion and United Airlines' over $3.3 billion, indicating a lack of competitiveness that may impact investor confidence.
- Leadership Scrutiny: The airline's poor performance has led pilot and flight attendant unions to question CEO Robert Isom's leadership, arguing that the company has failed to define an effective strategy to correct its course, resulting in employee disappointment about the future.
- Transformation Challenges: American Airlines is attempting to boost revenue through premium product offerings, despite sluggish growth in economy cabin revenue; Isom stated that by 2026, half of the company's revenue is expected to come from
See More
"Transportation Stocks Surge, Triggering Buy Signal from 'Dow Theory'"
- Transportation Shares Movement: Recent activity in transportation stocks indicates potential for continued stock market rally despite recent downturns.
- Market Resilience: The resilience of transportation shares suggests that investor confidence may remain strong, supporting overall market performance.
- Stock Market Dynamics: The interplay between transportation stocks and broader market trends highlights the importance of sector performance in stock market recovery.
- Investor Sentiment: Positive movements in specific sectors like transportation can influence overall investor sentiment and market outlook.
See More
Elliott Investment Management Cuts Its Stake as This Airline Stock Rises in 2026.
- Southwest Airlines Performance: Shares of Southwest Airlines have significantly outperformed the broader market in 2026.
- Elliott Investment Management's Involvement: The strong performance follows a year after Elliott Investment Management took an interest in the airline.
- Stake Reduction: Elliott Investment Management is now reducing its stake in Southwest Airlines.
- Market Context: The actions of the activist investor reflect ongoing changes in the airline's investment landscape.
See More
Southwest Airlines Declares Quarterly Cash Dividend
- Quarterly Cash Dividend: Southwest Airlines' Board of Directors declared a cash dividend of $0.18 per share for shareholders of record as of March 12, 2026, demonstrating the company's ongoing commitment to shareholder returns.
- Payment Schedule: The dividend will be paid on April 2, 2026, ensuring timely returns for shareholders, which may enhance investor confidence and attract additional investments.
- Shareholder Return Strategy: By implementing regular dividends, Southwest Airlines not only increases shareholder return rates but also strengthens its market position in the airline industry, showcasing the company's robust financial health.
- Market Reaction Expectations: The dividend announcement is expected to elicit a positive market response, potentially driving up the stock price and reflecting investor optimism regarding the company's future growth prospects.
See More
Southwest Airlines Declares $0.18 Quarterly Dividend
- Quarterly Dividend Declaration: Southwest Airlines has declared a quarterly dividend of $0.18 per share, consistent with previous distributions, indicating the company's stable cash flow and profitability.
- Dividend Yield: The forward yield of 1.37% provides investors with a relatively stable return, enhancing the company's attractiveness among investors seeking income.
- Payment Schedule: The dividend is payable on April 2, with a record date of March 12 and an ex-dividend date also on March 12, ensuring shareholders receive their earnings promptly.
- Dividend Growth Potential: Southwest Airlines' dividend distribution strategy reflects confidence in future earnings growth, which may attract more income-seeking investors and further enhance the company's stock performance.
See More
American Airlines Faces Challenges in Turnaround Efforts
- Leadership Scrutiny: Pilot and flight attendant unions have raised concerns about CEO Robert Isom's leadership, citing underperformance in financial and operational metrics that have led to reduced profit-sharing for employees, negatively impacting morale.
- Profitability Decline: American Airlines reported a profit of $111 million in 2025, which pales in comparison to Delta Air Lines' $5 billion and United Airlines' $3.3 billion profits, highlighting a significant gap in market competitiveness.
- Transformation Strategy: Isom has outlined a strategy focused on enhancing customer service and revenue management, expressing optimism for 2026 despite challenges posed by winter storms, and emphasizing the need for accountability from senior leadership and teamwork.
- Intensified Market Competition: American Airlines faces fierce competition at major hubs like Chicago and Charlotte, particularly against United Airlines, with analysts questioning whether the current strategy will effectively close the performance gap with peers, indicating a long road ahead for transformation.
See More
American Airlines Profits Lag Behind Rivals Significantly
- Profit Comparison: American Airlines reported only $111 million in profit last year, significantly trailing Delta Air Lines' $5 billion and United Airlines' over $3.3 billion, indicating a lack of competitiveness that may impact investor confidence.
- Leadership Scrutiny: The airline's poor performance has led pilot and flight attendant unions to question CEO Robert Isom's leadership, arguing that the company has failed to define an effective strategy to correct its course, resulting in employee disappointment about the future.
- Transformation Challenges: American Airlines is attempting to boost revenue through premium product offerings, despite sluggish growth in economy cabin revenue; Isom stated that by 2026, half of the company's revenue is expected to come from
See More
"Transportation Stocks Surge, Triggering Buy Signal from 'Dow Theory'"
- Transportation Shares Movement: Recent activity in transportation stocks indicates potential for continued stock market rally despite recent downturns.
- Market Resilience: The resilience of transportation shares suggests that investor confidence may remain strong, supporting overall market performance.
- Stock Market Dynamics: The interplay between transportation stocks and broader market trends highlights the importance of sector performance in stock market recovery.
- Investor Sentiment: Positive movements in specific sectors like transportation can influence overall investor sentiment and market outlook.
See More
Elliott Investment Management Cuts Its Stake as This Airline Stock Rises in 2026.
- Southwest Airlines Performance: Shares of Southwest Airlines have significantly outperformed the broader market in 2026.
- Elliott Investment Management's Involvement: The strong performance follows a year after Elliott Investment Management took an interest in the airline.
- Stake Reduction: Elliott Investment Management is now reducing its stake in Southwest Airlines.
- Market Context: The actions of the activist investor reflect ongoing changes in the airline's investment landscape.
See More
Southwest Airlines Declares Quarterly Cash Dividend
- Quarterly Cash Dividend: Southwest Airlines' Board of Directors declared a cash dividend of $0.18 per share for shareholders of record as of March 12, 2026, demonstrating the company's ongoing commitment to shareholder returns.
- Payment Schedule: The dividend will be paid on April 2, 2026, ensuring timely returns for shareholders, which may enhance investor confidence and attract additional investments.
- Shareholder Return Strategy: By implementing regular dividends, Southwest Airlines not only increases shareholder return rates but also strengthens its market position in the airline industry, showcasing the company's robust financial health.
- Market Reaction Expectations: The dividend announcement is expected to elicit a positive market response, potentially driving up the stock price and reflecting investor optimism regarding the company's future growth prospects.
See More
Southwest Airlines Declares $0.18 Quarterly Dividend
- Quarterly Dividend Declaration: Southwest Airlines has declared a quarterly dividend of $0.18 per share, consistent with previous distributions, indicating the company's stable cash flow and profitability.
- Dividend Yield: The forward yield of 1.37% provides investors with a relatively stable return, enhancing the company's attractiveness among investors seeking income.
- Payment Schedule: The dividend is payable on April 2, with a record date of March 12 and an ex-dividend date also on March 12, ensuring shareholders receive their earnings promptly.
- Dividend Growth Potential: Southwest Airlines' dividend distribution strategy reflects confidence in future earnings growth, which may attract more income-seeking investors and further enhance the company's stock performance.
See More
