Southwest Airlines Co. (LUV) is scheduled to report first-quarter 2026 results on April 22.
Southwest Airlines has an encouraging earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average beat of 253.92%.
Let’s see how things have shaped up for Southwest Airlines this earnings season.
Factors Likely to Have Influenced LUV’s Q1 Performance
The Zacks Consensus Estimate for LUV’s first-quarter 2026 revenues is pegged at $7.22 billion, indicating 12.32% growth year over year. Management anticipates first-quarter 2026 unit revenues to be up at least 9.5% on a year-over-year basis, on capacity up 1-2% year over year.
We expect LUV's performance in the to-be-reported quarter to have been boosted by an uptick in total revenues, driven by high passenger revenues, as domestic air-travel demand stabilizes. Our estimate for passenger revenues in the to-be-reported quarter indicates a 11.5% increase from first-quarter 2025 actual.
LUV is also expected to have benefited from revenue initiatives and continued cost control, which contribute to solid results and strong momentum. The company’s customer-focused product offering, operational excellence and dramatic progress from the transformational initiatives implemented last year are likely to have acted as other tailwinds. Further, Southwest Airlines’ lean cost structure, expanding operations and strategic partnerships, coupled with its efforts to reward its shareholders, also bode well.
The Zacks Consensus Estimate for LUV’s first-quarter 2026 earnings has been revised downward by 11.76% in the past 60 days to 45 cents per share. However, the consensus mark implies an upside of more than 100% from the year-ago actual. The consensus estimate matches the company-provided guidance.
LUV no longer aggressively follows the practice of fuel hedging, having discontinued the practice last year. However, the low-cost carrier still has some hedging contracts. As a result, the negative impact of the ongoing Middle East conflict-induced fuel price increase is softer on the carrier than its U.S.-based peers. LUV anticipates first-quarter 2026 fuel cost per gallon to be around $2.40.
Escalated labor and airport costs have been high, which are likely to have hurt the company’s bottom-line performance in the March quarter. LUV expects to continue experiencing increased cost pressure from the labor agreements and deals inked with the pilots. We expect operating costs to increase 3% in first-quarter 2026 from first-quarter 2025 actuals, led by the 3.7% rise in salaries and related costs.
LUV anticipates first-quarter 2026 CASM-X to be up almost 3.5% year over year, which includes a 1.1 point impact from the removal of six seats from the Boeing 737-700 fleet to enable extra legroom seating. While rising fuel and labor costs remain key challenges, other headwinds such as geopolitical uncertainty, tariff-related pressures and persistent inflation continue to weigh on LUV’s operations.
What Our Model Says About LUV
Our proven model does not conclusively predict an earnings beat for Southwest Airlines this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Southwest Airlines has an Earnings ESP of -0.28% and a Zacks Rank #3.
Southwest Airlines Co. Price and EPS Surprise
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
Highlights of LUV’s Q4 Earnings
Southwest Airlines reported mixed fourth-quarter 2025 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues lagged the same.
Quarterly earnings of 58 cents per share beat the Zacks Consensus Estimate of 56 cents and improved 3.6% year over year. Revenues of $7.44 billion missed the Zacks Consensus Estimate of $7.52 billion, but improved 7.4% year over year. Passenger revenues (which accounted for 91.1% of the top line) grew 7.6% year over year to $6.78 billion.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
Ryder System, Inc. (R) has an Earnings ESP of +0.66% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ryder is set to report first-quarter 2026 earnings on April 23. The Zacks Consensus Estimate for Ryder’s first-quarter 2026 earnings has been revised 17.33% downward over the past 60 days. Ryder’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed the mark in the remaining one, the average beat being 1.91%.
Union Pacific (UNP) has an Earnings ESP of +0.24% and a Zacks Rank #3 at present. UNP is scheduled to report first-quarter 2026 earnings on April 23.
The Zacks Consensus Estimate for first-quarter 2026 earnings has remained unchanged over the past 60 days. UNP’s earnings beat the Zacks Consensus Estimate in two of the preceding four quarters (missing the mark on the other two occasions). The average beat is 1.34%.
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Southwest Airlines Co. (LUV): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).