New York, Jan 29, 2026, 12:52 EST — Regular session
Shares of Southwest Airlines surged almost 15% to $46.95 during Thursday’s midday session, following the airline’s announcement that its business overhaul is poised to drive a significant earnings boost in 2026.
This move is significant as Southwest revamps its approach—now charging for bags and pushing seat upgrades more aggressively—after years of standing apart on fees and seating policies. Investors are focused on whether these changes will generate steady revenue without driving customers to competitors.
Southwest projects adjusted earnings per share of at least $4.00 for 2026, excluding special items, and expects first-quarter adjusted EPS to hit at least $0.45. The airline also anticipates a rise in unit revenue—revenue per available seat mile (RASM)—of at least 9.5% in the March quarter, with capacity, measured in available seat miles (ASMs), increasing between 1% and 2%. “Southwest closed 2025 with strong momentum,” CEO Bob Jordan said, calling last year’s changes “the most ambitious transformation in Company history.” (Southwest Airlines Co.)
On Thursday’s earnings call, executives unveiled the latest lineup, with Jordan, Chief Operating Officer Andrew Watterson, and Chief Financial Officer Tom Doxey taking the lead. (Southwest Airlines Co.)
On the call, Watterson described customer feedback on assigned seating and extra-legroom options as “overwhelmingly positive” since their rollout earlier this week. Jordan cautioned against celebrating too soon, telling analysts the company needs “a month or two” of close-in booking data before setting a firm upper limit on its 2026 earnings forecast. (Investing)
But the wager isn’t straightforward. If travelers resist new fees or upgrades — or if demand weakens heading into spring — the boost in revenue might fall short of the company’s initial forecasts, putting the stock at risk after its recent climb.
Southwest posted its earnings release in an 8-K filed Wednesday, according to the document. (Southwest Airlines Co.)
On Thursday, a Schedule 13G/A filing revealed that Franklin Resources and associated parties reported owning 7.8% of Southwest’s common stock as of Dec. 31, 2025. (Southwest Airlines Co.)
Wall Street is closely tracking how this new fee-heavy approach compares to U.S. carriers that already charge for seat selection and checked baggage. Analysts surveyed by LSEG had predicted adjusted profits of $3.19 per share in 2026, Reuters reported. The company plans to offer more detailed guidance in its upcoming quarterly report in April. (Reuters)
