Southwest Airlines forecasts surge in 2026 profits after new seat, bag fees take hold

Southwest Airlines on Wednesday forecast a surge in 2026 profits well above analysts’ expectations as the carrier has overhauled its half-century-old business model to include new moneymakers like bag and seat assignments.

The airline expects to earn at minimum, an adjusted $4 a share this year, exceeding the $3.19 analysts expected, according to estimates from LSEG, with capacity growth of 2% to 3% compared with 2025.

In the first quarter, Southwest said it expects revenue per seat mile to rise 9.5%, above the 8.5% analysts expected. The carrier forecast adjusted earnings of 45 cents for the first quarter, above the 33 cents Wall Street projected.

Here’s how Southwest performed in fourth quarter compared with Wall Street expectations, according to consensus estimates from LSEG:

• Earnings per share: 58 cents adjusted vs. 58 cents cents expected
• Revenue: $7.44 billion vs. $7.51 billion expected

Southwest has spent much of the past two years making drastic changes to its business model, including ending its open boarding policy and moving to assigned seats, which comes with upcharges for certain spots, including its new extra legroom section.

Last year, it began charging customers to check bags for the first time ever. The policies make the longtime industry standout more like its rivals as the airline faces pressure to improve profits.

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