New York, January 29, 2026, 20:58 ET — Market closed
- Shares of Southwest Airlines surged 18.7% on Thursday, closing at $48.50, after the airline projected 2026 profits that topped Wall Street expectations.
- The airline forecast adjusted earnings of at least $4.00 per share for 2026 and projected first-quarter unit revenue to increase by at least 9.5% year over year.
- Investors are keeping an eye on early sales of paid seat upgrades and the company’s upcoming quarterly report in April, while U.S. aviation braces for possible shutdown risks this weekend.
Southwest Airlines Co shares surged 18.7% Thursday, closing at $48.50 after sinking to $42.80 earlier in the session. The rally came on the back of a bullish 2026 profit outlook linked to its move toward paid seating and additional fees. The stock wrapped up trading close to its intraday peak. (Reuters)
As the market remains closed today, attention shifts to whether the rally will extend into Friday and how fast Southwest can demonstrate the new model’s staying power. The airline is abandoning its longtime strategy of open seating and free checked bags—a straightforward approach that left it with limited flexibility when costs climbed and demand changed.
The timing is crucial given the blunt nature of the guidance. Southwest forecasts adjusted earnings of at least $4.00 per share for 2026, well above the analysts’ consensus of $3.19. For Q1, it anticipates an adjusted profit of 45 cents per share, beating estimates of 33 cents. These “adjusted” figures strip out items the company labels as special.
Southwest reported a record year for revenue, even as it invested heavily in overhauling its operations. The airline posted a fourth-quarter operating revenue high of $7.4 billion and $28.1 billion for the full year. It also returned $2.9 billion to shareholders through dividends and buybacks in 2025. CEO Bob Jordan described last year’s efforts as “the most ambitious transformation” in the company’s history. (Southwest Airlines Co.)
Southwest has already rolled out these updates on its planes. Assigned seating and extra-legroom options kicked in for flights starting Jan. 27, paired with a new product lineup featuring bag fees, a basic economy fare, and tweaks to flight credit policies. The airline also highlighted plans to boost online distribution and provide free Wi‑Fi to loyalty program members.
The jump sent the stock to its highest closing level since November 2021, MarketWatch reports. This gain stood out during a session when major tech stocks weighed on the broader indexes. (MarketWatch)
Investors are zeroing in on Southwest’s near-term revenue and cost details. The airline forecasted first-quarter unit revenue — measured as revenue per available seat mile, a crucial indicator of pricing strength — to climb by at least 9.5% compared to last year. Fuel costs for the quarter are expected to hover around $2.40 per gallon. Southwest also noted that taking six seats out of its Boeing 737-700s to add more legroom will push unit costs higher this quarter.
The competitive angle is clear. Delta Air Lines, United Airlines, and American Airlines have long relied on fees and fare bundles, selling seat assignments and extra-legroom options. After years of standing apart, Southwest is now edging toward adopting similar tactics.
But this shift isn’t without risks. If passengers reject the new fees, or if winter weather and air traffic limits hit again, the boost in revenue could vanish quickly—and cutting back on costs would get tougher. Airlines also flag potential trouble if Washington faces a partial government shutdown starting Saturday, which in the past triggered government-mandated flight reductions and widespread chaos, according to industry group Airlines for America. (Reuters)
A regulatory filing late Thursday revealed major shareholders’ stakes as of year-end. Franklin Resources reported beneficial ownership of roughly 40.2 million Southwest shares, representing 7.8% of the class. Putnam Investment Management held 6.0%. (Southwest Airlines Co.)
Now it’s about results, not just talk. Southwest expects to gauge customer appetite for assigned seating and extra legroom within the next month. It also aims to deliver more detailed 2026 forecasts with its April quarterly update — a date traders are marking as the key catalyst for LUV.
