A Southwest Airlines aircraft is parked at Gate B33, its tail sticking into the sunlight, at Boston Logan International Airport in Boston, Massachusetts, on December 22, 2025.
Austin DeSisto | Null Photo | Getty Images
southwest airlines The company said Wednesday it is overhauling its half-century-old business model to incorporate new revenue streams such as baggage fees and seat reservations, and expects 2026 profits to soar, far more than analysts expected.
LSEG estimates the company is expected to post adjusted earnings of at least $4 per share this year, beating analysts’ expectations of $3.19. It also forecasts a 2-3% increase in production capacity compared to 2025, which could be almost double last year’s capacity expansion.
“We wanted to give the company a little more time before we put forward the high end of this forecast to allow a little more information to come in,” Chief Financial Officer Tom Doxey said of the new initiative in an interview Wednesday. He said travel demand is strong.
Southwest shares rose more than 5% in post-market trading following the company’s report.
Southwest Airlines said it expects revenue per seat mile to rise 9.5% in the first quarter, higher than analysts’ expectations of 8.5%. The company expects first-quarter adjusted earnings of at least 45 cents, beating Wall Street’s estimate of 33 cents.
The forecast includes the effects of this week’s winter storm, which Chief Executive Officer Bob Jordan told CNBC’s Phil LeBeau on Thursday could cost about $30 million to $40 million.
“Despite the impact of Winter Storm Fern, we are off to a strong start in 2026 due to the company’s customer-focused product offerings, operational excellence and dramatic progress on the transformational initiatives we implemented last year,” Jordan said in the earnings call. A sweeping winter storm forced airlines to cancel thousands of flights, but Southwest Airlines’ Texas rival also american airlines They are particularly struggling to recover from the effects of weather.
According to LSEG consensus estimates, the company’s fourth-quarter results compared to Wall Street expectations are as follows:
Earnings per share: 58 cents adjusted vs. 58 cents expected Earnings: $7.44 billion vs. $7.51 billion expected
Southwest Airlines has spent the better part of the past two years making fundamental changes to its business model, including eliminating its open boarding policy and moving to a seat reservation system starting this week. Seat reservations will come at an additional cost in certain spots, such as sections with new legroom.
Last year, the airline introduced basic economy fares, charging customers for checked baggage for the first time in its history. As airlines face pressure to improve profits, the policy will help the long-established industry stand out as much as its rivals.
“We’re not done yet,” Doxey said Wednesday of the company’s efforts. Carrier executives have previously discussed other business possibilities. Jordan said in an interview last month that Southwest Airlines is considering airport lounges.
Southwest Airlines executives are expected to face questions from investors during a conference call Thursday morning about the cost of the storm, new revenue streams and profit growth in coming years, beyond the jump in sales since its debut.
Southwest Airlines’ fourth-quarter net income rose about 24% from a year earlier to $323 million, and revenue rose 7.4% to $7.44 billion. Adjusting for one-time items such as restructuring, Southwest’s profit was $301 million, or 58 cents per share, down from $356 million, or 56 cents per share, in the year-ago period.
