LUV

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Southwest Airlines stock has delivered a 38.0% gain over the past three years, yet the current valuation checks present a mixed picture on how much upside may be left at around US$40 per share. Over three years, shareholders have seen a 38.0% return, which puts Southwest Airlines in the category of stocks where past gains now need to be weighed carefully against what the current price implies. Future cash flow and margin expectations can support the current valuation if Southwest Airlines continues to execute on its low cost model, while any sustained pressure on capacity, unit revenues or operating costs may challenge the case for paying up from here. On Simply Wall St's broader checks, Southwest Airlines screens as undervalued on some multiples yet scores 3 out of 6 overall, which points to a mixed valuation story rather than a clear bargain. The issue now is whether Southwest Airlines' recent share price level still offers an appealing entry point on a risk adjusted basis or largely reflects those past returns already. Southwest Airlines delivered 25.5% returns over the last year. See how this stacks up to the rest of the Airlines industry. The P/E ratio is a common way to look at Southwest Airlines because it ties the share price directly to reported earnings. At around 23.6x earnings, Southwest Airlines trades at a premium to the broader airlines industry, where the average P/E sits near 11.5x, and also above the peer average of about 10.6x. Simply Wall St's fair P/E ratio for Southwest Airlines is 26.6x, which is higher than the current 23.6x. That implies the stock is pricing in less than what this framework suggests when it factors in the company’s profile, margins and risks. While the P/E is not low in absolute terms, the gap to this fair ratio indicates that Southwest Airlines appears undervalued on earnings relative to where this model would place it. Based on the P/E multiple alone, Southwest Airlines stock appears undervalued compared with the level suggested by the fair ratio model. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Southwest Airlines pick up where the valuation puzzle above leaves off by spelling out what mix of future growth, margins and earnings would need to occur for the stock to be worth materially more or less than today’s price. Each narrative links a specific fair value to a particular set of potential catalysts and risks for Southwest Airlines' business so you can later see which storyline is closest to how events develop. The community is split on Southwest Airlines, with one camp focused on upside from execution and partnerships, and the other worried about fuel, costs, and structural shifts in demand. Bull case: 22% undervalued Read the full Bull Case to see why Southwest Airlines could be undervalued Bear case: 15% overvalued Read the full Bear Case to see why Southwest Airlines could be overvalued Do you think there's more to the story for Southwest Airlines? Head over to our Community to see what others are saying! For Southwest Airlines, the current P/E based signals point to a stock that screens as modestly undervalued on earnings, but not without question marks. The broader checks are only mixed, which keeps this from being a clear value call and instead frames it as a debate about how much execution and pricing power the airline can deliver from here. The crux is whether Southwest can sustain attractive margins while managing aircraft concentration risk and cost pressures. Your view on that trade off is likely to drive whether the present valuation looks like a reasonable entry or a value trap. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LUV. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Earlier in August 2026, Southwest Airlines Co. reported second-quarter adjusted earnings of US$0.94 per share that exceeded estimates, underpinned by strong passenger and record managed business revenues, and entered a new five-year US$2.00 billion revolving credit facility with an accordion feature up to US$3.00 billion. The airline also issued upbeat guidance for third-quarter and full-year 2026 while adding experienced travel and technology leaders Jason Liberty and Varun Krishna to its board, highlighting both financial flexibility and a push to strengthen commercial and digital capabilities. Next, we will examine how Southwest’s stronger-than-expected earnings and reinforced liquidity position could influence its longer-term investment narrative. Invest in the nuclear renaissance through our list of 92 elite nuclear energy infrastructure plays powering the global AI revolution. To own Southwest today, you need to believe that its commercial upgrades and operational efficiencies can offset macro uncertainty, competition, and fuel cost volatility. The earnings beat and new revolving credit facility reinforce liquidity and near term flexibility, but do not remove key risks around booking softness and aircraft supply, which still look like the most important near term swing factors for the story. The new US$2.00 billion revolving credit facility, expandable to US$3.00 billion, is especially relevant here. It underpins Southwest’s ability to keep investing in product changes like premium seating, basic economy, and distribution partnerships while managing through potential demand swings and cost pressure. That additional liquidity support may matter if macro or fuel headwinds intensify at the same time as the airline is rolling out these revenue initiatives. Yet behind this stronger liquidity, the exposure to fuel price swings and shifting demand patterns is something investors should be very aware of... Read the full narrative on Southwest Airlines (it's free!) Southwest Airlines' narrative projects $35.7 billion revenue and $2.4 billion earnings by 2029. This requires 5.9% yearly revenue growth and about a $1.6 billion earnings increase from $837.0 million today. Uncover how Southwest Airlines' forecasts yield a $51.79 fair value, a 28% upside to its current price. Some of the lowest estimate analysts were assuming Southwest would reach about US$34.8 billion in revenue and US$2.3 billion in earnings by 2029, yet they still saw material risk that rising labor and fuel costs could cap the benefit of today’s earnings beat and new credit line, reminding you that opinions differ widely and both bullish and bearish views may shift as fresh data comes in. Explore 5 other fair value estimates on Southwest Airlines - why the stock might be worth over 2x more than the current price! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your Southwest Airlines research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision. Our free Southwest Airlines research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Southwest Airlines' overall financial health at a glance. Our top stock finds are flying under the radar-for now. Get in early: The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these 17 smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement. The future of work is here. Discover the 37 top robotics and automation stocks leading the charge in AI-driven automation and industrial transformation. AI is about to change healthcare. These 41 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LUV. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

A month has gone by since the last earnings report for Southwest Airlines (LUV). Shares have lost about 10.8% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is Southwest due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers. Southwest Airlines reported second-quarter 2026 adjusted earnings of 94 cents per share, up 118.6% year over year and 80.8% above the Zacks Consensus Estimate of 52 cents. Record operating revenues of $8.43 billion rose 16.4% but missed the consensus mark of $8.58 billion by 1.7%. Results benefited from demand for enhanced products, record managed business revenues and cost discipline despite an $889 million increase in fuel expense. Adjusted unit revenues jumped 20.1%, while adjusted operating margin expanded 3.3 points to 6.7%. Passenger revenues, which accounted for 91.9% of the top line, increased 16.9% year over year to $7.75 billion. The improvement reflected higher fares and strong customer response to Southwest’s expanded commercial offerings. Freight revenues rose 13.6% to $50 million. Other operating revenues increased 11.2% to $637 million, providing another source of growth beyond ticket sales. Revenue passenger miles, a measure of traffic, increased 1.2% year over year to 37.35 billion. Capacity, measured in available seat miles, edged up only 0.2% to 47.09 billion, allowing demand growth to outpace supply. The load factor improved 0.8 percentage points to 79.3%. Average passenger fare climbed 20.9% to $225.61, while passenger revenue per available seat mile advanced 16.7% to 16.45 cents. Revenue passengers carried declined 3.3% to 34.3 million. Total operating expenses increased 16.1% year over year to $8.15 billion. Aircraft fuel and related taxes surged 67% to $2.22 billion, representing the largest cost headwind during the quarter. Fuel cost per gallon increased 69% to $3.92. Still, cost per available seat mile excluding fuel, special items and profit sharing rose a more moderate 3.4% to 12.45 cents, coming in below the company’s prior guidance. Adjusted operating income climbed 138.8% to $585 million. Reported operating income increased 26.7% to $285 million despite the sharp rise in fuel costs. Managed business revenues reached a quarterly record and increased 30% year over year. The performance highlighted stronger demand from corporate customers and broadened the company’s revenue mix. Rapid Rewards enrollment rose 35%, while the loyalty program reached nearly 100 million members and posted record tier qualifiers. Acquisitions for the Chase co-branded credit card accelerated 28%, with double-digit growth in every month of the quarter. Southwest also completed service rollouts to five new destinations and added Air Premia as its ninth airline partner. The carrier operated its first aircraft equipped with Starlink connectivity during the quarter. Southwest ended June with cash and cash equivalents of $3.79 billion, up from $3.23 billion at the end of 2025. Total liquidity was $5.3 billion, including a $1.5 billion revolving credit facility. Net cash provided by operating activities rose to $530 million from $401 million a year earlier. Capital expenditures totaled $818 million, while proceeds from property and equipment sales reached $258 million. The company paid $88 million in dividends during the quarter. It ended the period with $3.79 billion of long-term debt, excluding current maturities, and reported gross leverage of 2.1 times. For third-quarter 2026, Southwest expects adjusted earnings of 50-75 cents per share. Capacity is projected to decline 1% to remain flat, while unit revenues are forecast to increase 17.5-19.5% year over year. Third-quarter cost per available seat mile excluding fuel, special items and profit sharing is expected to rise 3.5-4%. Fuel cost per gallon is projected between $3.70 and $3.75. For 2026, management expects adjusted earnings of $3.25-$4.25 per share, replacing its prior expectation of at least $4. Capacity growth is now forecast at roughly 1.5%, down from 2%. Net capital spending is expected near the low end of, or below, the previously announced $3-$3.5 billion range. In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -12.83% due to these changes. Currently, Southwest has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for value investors. Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Southwest has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Southwest Airlines Co. (LUV) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Southwest Airlines Co. LUV has a stronger investment case after a sharp earnings rebound and a major stock rally. Better revenue productivity, solid liquidity and shareholder returns support the recovery story. The case is still balanced. Fuel exposure, Boeing-related execution risk and a valuation premium to the airline sub-industry limit how aggressively investors may want to chase the shares. Southwest Airlines reported second-quarter 2026 adjusted earnings of 94 cents per share, up 118.6% year over year. The result was 80.8% above the Zacks Consensus Estimate of 52 cents. The earnings beat came despite a revenue miss. Operating revenues of $8.43 billion rose 16.4% but missed the consensus mark by 1.7%, showing that cost control and stronger unit economics were central to the quarter’s upside. Southwest Airlines Co. price-consensus-eps-surprise-chart | Southwest Airlines Co. Quote Adjusted operating income climbed 138.8% to $585 million. Adjusted operating margin expanded 3.3 percentage points to 6.7%, despite an $889 million year-over-year increase in fuel expense. The improvement was not driven by broad volume growth. Capacity increased only 0.2%, while adjusted revenue per available seat mile jumped 20.1%, helped by higher fares, disciplined capacity, assigned and extra-legroom seating, bag fees and better revenue management. LUV trades at 0.66X forward 12-month price-to-sales. That is above 0.53X for the Zacks airline sub-industry but below Southwest Airlines' five-year median of 0.88X. That creates a split valuation picture. The stock may look inexpensive against its own history, but it does not offer a clear discount to direct industry benchmarks. Delta Air Lines DAL and American Airlines Group AAL remain relevant peers for investors comparing airline demand, pricing and cost exposure; Delta Air Lines operates a global network serving more than 290 destinations, while American Airlines' investor relations site provides financial information for stockholders and analysts. Southwest Airlines' $55 price target compares with a reported share price of $46.31. The target still implies upside, but the stock has already gained 12.1% year to date and 50.8% over the trailing 12 months. After that move, execution matters more. Further appreciation likely depends on whether Southwest Airlines can sustain unit-revenue gains while managing fuel, retrofit costs and fleet-delivery risk. Southwest Airlines ended the second quarter with $5.3 billion of liquidity, including $3.8 billion in cash and cash equivalents. Gross leverage was 2.1 times, and first-half operating cash flow reached nearly $2 billion. Capital allocation also supports flexibility. The company paid $181 million in dividends in the first half of 2026 and repurchased $1.25 billion of common stock in the first quarter, while management expects 2026 net capital spending near the low end of, or below, the prior $3.0-$3.5 billion range. The bottom line: Southwest Airlines has improved its earnings profile, but investors still need confirmation that the rebound can withstand fuel volatility, higher nonfuel costs and Boeing-related execution challenges. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Its Value Score of A, Growth Score of A, Momentum Score of B and VGM Score of A indicate favorable estimate and style characteristics, but the remaining risk factors argue for selectivity rather than an unconditional chase after the rally. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Southwest Airlines Co. (LUV) : Free Stock Analysis Report Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report American Airlines Group Inc. (AAL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

JetBlue (JBLU) jumped 9% after the airline beat Q2 adjusted EPS estimates and setting a 2028 profit target of at least $1 per share, pushing the stock 33% higher YTD. Delta (DAL) and United (UAL) rose moderately on JetBlue's demand read, despite neither carrier reporting company-specific news Tuesday. JetBlue's GAAP net loss widened to $247 million as fuel costs surged 81%, leaving full-year operating margin still guided negative despite the rally. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Delta Air Lines didn't make the cut. Grab the names FREE today. Shares of JetBlue Airways (NASDAQ:JBLU) are up 9% to $5.94 in Tuesday midday trading after the carrier posted a Q2 2026 adjusted-EPS beat, reinstated its full-year outlook, and introduced a long-term 2028 profit target of at least $1 per share. The move is lifting the broader airline group even as JetBlue's headline GAAP loss actually widened. JetBlue stock is now up 33% year to date (YTD) after Tuesday's pop, and the read-through to industry demand is what's bidding up peers. None of the other carriers had clear, company-specific catalysts Tuesday. This is a turnaround-optimism rally powered by adjusted metrics and forward targets while GAAP profitability remains out of reach. Fuel costs still surged, and JetBlue's full-year operating margin is still guided negative. JetBlue's Q2 revenue rose 14.5% year over year (YoY) to $2.7 billion, in line with the $2.69 billion consensus, with unit revenue (RASM) up 10.9%. Its adjusted loss of $0.66 per share beat the $0.6828 loss expected. JetBlue recaptured 50% of higher fuel costs in Q2, ahead of the 30% to 40% pace that had been expected, with full recapture expected by early 2027. The airline reinstated full-year 2026 guidance calling for RASM growth of 10% to 12.5%, an adjusted operating margin of -2% to -5%, and a full-year 2026 jet fuel price of about $3.49 per gallon. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Delta Air Lines didn't make the cut. Grab the names FREE today. CEO Joanna Geraghty stated that the company is "introducing a long-term financial target of at least $1 in earnings per share for 2028" as JetBlue continues its path toward sustained profitability. Its JetForward turnaround program has already generated $470 million of cumulative incremental EBIT and is targeted at $1.2 billion by 2028. Delta Air Lines (NYSE:DAL) shares are up 3% to $88.80, and United Airlines (NASDAQ:UAL) shares are up 2% to $123.22, both moving on JetBlue's demand read. Neither carrier reported news of its own Tuesday. Southwest Airlines (NYSE:LUV) shares are up 2% to $46.06, and American Airlines Group (NASDAQ:AAL) shares are trading up 1% to $15.11. The move fits the pattern where a single carrier's unit-revenue beat can pull the whole tape higher. Shares of the U.S. Global Jets ETF (NYSEARCA:JETS) are up 3% to $31.80. The JETS ETF is a concentrated, single-sector airline product, so it can provide substantial gains on days like this and may also bring drawdowns when fuel costs spike or travel demand softens. The bull case on JetBlue leans on the revenue beat, the 10.9% RASM gain, faster-than-expected fuel recapture, JetForward execution, and the credibility of the 2028 EPS target. Premium RASM climbed 13%, loyalty revenue grew 13% YoY, and Fort Lauderdale unit revenue rose 11% despite 40% capacity growth in the market. The turnaround narrative has a track record behind it, too. JetForward delivered $305 million of incremental EBIT in 2025, above its $290 million target, and is guided to at least $310 million more in 2026. That gives the 2028 goal some execution credibility as JetBlue scales BlueFirst domestic first class, its Boston BlueHouse lounge, and the Blue Sky partnership with United Airlines. The bear case is real, though. JetBlue's GAAP net loss widened to $247 million from $74 million a year ago as average fuel cost surged 81% to $4.23 per gallon, and full-year operating margin is still guided negative. Investors should consider keeping their position sizes modest given the execution risk on a long-dated 2028 goal and JetBlue stock's beta of 1.73. Market watchers can watch for whether JetBlue stock holds above the prior $5.56 average analyst target after Tuesday's rally and whether Q3 2026 RASM guidance of 12.5% to 16.5% is corroborated by peer commentary. Traders can also monitor WTI crude oil at $79.04 per barrel, since jet fuel remains the single biggest swing factor for JetBlue's 2026 margin path. JetBlue's Q2 delivered enough good news to power a double-digit rally and pull peers Delta, United, Southwest, and American with it, though the story remains a slow turnaround rather than a clean profit inflection. The next checkpoints come from other airline earnings reports and any move in the crude complex. For investors seeking exposure through the U.S. Global Jets ETF, the same concentration note applies to their portfolios. After all, airline stocks tend to move together on fuel and demand headlines. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Delta Air Lines didn't make the cut. Grab the names FREE today. Contact [email protected] for any questions or corrections.

Thursday, July 23rd, 2026Hostilities heating up in the Strait of Hormuz are taking spot oil prices up 4-5% and pre-market futures down precipitously. With the Yemeni Houthis now involved bombing Saudi oil tankers and repeated U.S. air strikes in Iran, WTI oil prices have risen +4% to over $91 per barrel (/bbl) and Brent crude is up +5% to nearly $100/bbl. The Dow, as a result, is down -560 points at this hour. The S&P 500 is -83 and the tech-heavy Nasdaq is -450. The small-cap Russell 2000 is -27 points at this hour. This, despite mostly positive data in earnings reports yesterday afternoon from Texas Instruments TXN, Southwest Airlines LUV and most especially Alphabet GOOGL. All these stocks are down in today’s pre-market trading session. Prior to the Covid pandemic, which pushed jobless claims up to record highs in the first half of 2020, we saw Weekly Jobless Claims reduce to lows not seen since Jimi Hendrix was on the album charts (album charts? ask your parents) in the late 1960s. We’re back there again this morning: Initial Jobless Claims reached 187K for last week, well below the 212K expected and the slightly upwardly revised 209K the previous week.For Continuing Claims, more of the same: 1.796 million is below the downwardly revised 1.798 million from the prior week, the lowest print since the week of May 30th, which included the Memorial Day holiday. A year ago, we were well above 1.9 million longer-term jobless claims (without ever hitting the psychologically important 2 million jobless claims), but we haven’t touched 1.9 million at all in 2026 so far. The world’s largest airline, American Airlines AAL, posted a whopping +400% positive earnings surprise this morning, swinging to a positive earnings result from a year ago to $0.15 per share. Revenues of $16.74 billion also beat estimates, by a decidedly less eye-popping +0.22%, but up big from the $14.39 billion reported in the year-ago quarter. Fuel costs in upcoming quarters is weighing on the share price this morning, however. For more on AAL’s earnings, click here.T-Mobile U.S. TMUS shares are trading down -5% at this hour, despite reporting a +25.7% earnings beat to $3.13 per share this morning, well ahead of the $2.84 per share posted in the year-ago quarter. Revenues came in at $22.79 billion, a +0.21% improvement from estimates and the $21.13 billion from Q2 2025. For more on TMUS’ earnings, click here.Investment bank Blackstone BX shares are flattish this morning — considered good news in the current trading climate — after surpassing earnings expectations by +14.3% to $1.52 per share. Revenues surprised by a solid +12.7% to $3.8 billion in the quarter. Shares are still down -20% year to date, but it’s nice to see the stock not being further gutted in this morning’s selloff. For more on BX’s earnings, click here.Aerospace and defense giant Lockheed Martin LMT shares are up in today’s pre-market by +5.5%, partly on increased tensions in the Middle East which may push up demand for military operation products and services, and partly on a strong Q2 performance. Earnings of $7.94 per share outpaced estimates by +9.97%, up from the $7.29 per share reported a year ago. Revenues of $20.06 billion beat forecasts by +3.26% this morning. For more on LMT’s earnings, click here. After today’s close, we’ll see Q2 earnings results from Zacks Rank #1 (Strong Buy) tech firm Intel INTC. The “world’s largest semiconductor company” has absolutely crushed earnings estimates over the past three quarters, and for the quarter it is expected to have grown +310% on earnings year over year, and +12% on revenues. Questions or comments about this article and/or author? Click here>> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lockheed Martin Corporation (LMT) : Free Stock Analysis Report Intel Corporation (INTC) : Free Stock Analysis Report Blackstone Inc. (BX) : Free Stock Analysis Report Texas Instruments Incorporated (TXN) : Free Stock Analysis Report Southwest Airlines Co. (LUV) : Free Stock Analysis Report American Airlines Group Inc. (AAL) : Free Stock Analysis Report T-Mobile US, Inc. (TMUS) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Southwest Airlines Co.? Here are five stocks we like better. Southwest Airlines posted a strong Q2 with adjusted EPS of $0.94, record revenue of $8.7 billion, and a 20.3% jump in adjusted operating revenue despite only 0.2% capacity growth. Management said the results show the earnings power of its commercial transformation. Revenue initiatives are driving growth, including bag fees, product changes, online travel agencies, and stronger corporate demand. Managed business revenue rose 30% year over year, Rapid Rewards enrollment climbed 35%, and Chase card acquisitions increased 28%. Southwest trimmed its full-year profit outlook to adjusted EPS of $3.25 to $4.25 as fuel costs remained elevated and fuel expense rose nearly $900 million year over year in Q2. Even so, the airline generated $500 million in operating cash flow, ended with $5.3 billion in liquidity, and maintained a solid leverage profile. MarketBeat Week in Review – 07/06 - 07/10 Southwest Airlines (NYSE:LUV) reported sharply higher second-quarter 2026 earnings and record revenue, with executives saying the carrier’s recent commercial transformation contributed across the full quarter for the first time. President and Chief Executive Officer Bob Jordan said the quarter showed “the earnings power of our business” and demonstrated that Southwest now has “a broader and more diversified set of revenue and commercial levers than at any point in our history.” → Could Truth API Become Trump Media’s First Meaningful Revenue Driver? Southwest MAX Incident Revives Headline Risk for Boeing and Airline Stocks The airline reported adjusted earnings per share of $0.94, up approximately 120% from a year earlier and above both its initial guidance and analyst consensus, according to Jordan. Adjusted operating margin was 6.7%, a 3.3-point improvement year over year, while after-tax return on invested capital was 9%. Southwest said adjusted operating revenue rose 20.3% on capacity growth of just 0.2%, reaching a quarterly record of $8.7 billion. Adjusted unit revenue increased 20.1% year over year, also reaching what Jordan described as an all-time quarterly record and exceeding the high end of the company’s prior guidance range. → 3 Photonics Companies Making Quantum Tech Possible These 3 Stocks Lowered Their Share Counts Drastically in Q1 Jordan and Chief Commercial Officer Justin Jones attributed the revenue gains to a mix of new and expanded initiatives, including product changes, bag fees, online travel agencies, change-related revenue and strength in the core business. Managed business revenue rose 30% year over year to a new quarterly record, surpassing the prior record set in the first quarter. Jordan said customer engagement also improved, with Rapid Rewards new member enrollments up 35% year over year and the program approaching nearly 100 million members. Tier qualification activity reached a record high, while Chase co-branded credit card acquisitions increased 28% from a year earlier. → AeroVironment’s Stock Is Down, But Drone Demand Is Taking Off Jones said the company is focused on building a “more productive commercial business” that balances unit revenue growth, disciplined capacity, network profitability and long-term customer engagement. He said corporate customers have shown strong adoption of the company’s new products, with growth visible across fares, load factor and share of origin-and-destination mix. In response to analyst questions about the impact of lapping initiatives introduced in 2025, Jordan said third-quarter comparisons will face a headwind from those actions, including bag fees, which he said represent about $1 billion annually. He said that excluding the impact of those comparisons, Southwest’s third-quarter unit revenue guidance would be ahead of the second-quarter result. Southwest now expects full-year 2026 adjusted earnings per share of $3.25 to $4.25. Jordan said the updated range replaces the company’s prior expectation of at least $4 per share and reflects the forward fuel curve as of July 17, while assuming the current fare environment and demand trends remain broadly intact. Jordan said the company faced an estimated year-to-date fuel headwind of approximately $1.33 per share but remains positioned to generate earnings broadly in line with the guidance it issued at the start of the year. Second-quarter fuel expense increased nearly $900 million year over year, and fuel averaged $3.92 per gallon during the quarter. Chief Financial Officer Tom Doxey said Southwest generated $500 million of operating cash flow in the quarter, up more than 32% year over year, and nearly $2 billion in operating cash flow during the first half. The company ended the quarter with $5.3 billion in liquidity, above its target of approximately $4.5 billion. Its gross leverage ratio was 2.1 times, within its stated range of 1 to 2.5 times and improved from 2.4 times at the end of 2025. For the third quarter, Southwest expects unit revenue to rise 17.5% to 19.5% year over year. The company expects CASM-X, or unit costs excluding fuel and special items, to increase 3.5% to 4% year over year on capacity that is flat to down 1%. Doxey said cost savings are being generated across the business, including technology, supply chain, maintenance and labor productivity. He said management has identified “hundreds of millions of dollars of incremental savings” since the start of the year, and those savings are incorporated into the full-year outlook. Second-quarter CASM increased 3.4% year over year on near-flat capacity, below the low end of prior guidance, Jordan said. Doxey also discussed gains from aircraft sales, saying Southwest views divestment of retiring assets as a durable strength. He said the company has more than 450 NG aircraft that will be retired over many years, and that gains on sales may be “a little lumpy by quarter” but should continue over time. Asked about capital spending and free cash flow, Doxey said operating cash flow should improve as underlying profitability improves, while the conversion to free cash flow will depend largely on the timing of aircraft deliveries. He said Southwest generally pays cash or uses unsecured or secured financing for aircraft, rather than relying on leasing structures that would reduce net capital expenditures. Chief Operating Officer Andrew Watterson said Southwest ranked first among large domestic carriers in completion factor during the quarter and improved its mishandled baggage performance year over year, despite higher volumes of gate-checked bags. He said trip net promoter score improved throughout the quarter and that Southwest maintained the lowest customer complaint rate among major U.S. airlines. Watterson acknowledged that on-time performance has declined in some areas, particularly during day-to-day “small-scale events” tied to high load factors and turn times. He said the company is focused on improving the last 10 minutes of aircraft turns and has already seen some benefits in July, with additional schedule changes expected in October. Southwest also highlighted several product and network updates. Jordan said the airline’s first Starlink-equipped aircraft entered service a few weeks before the call, beginning a new phase of in-flight connectivity. The company also expanded its airline partner network to nine carriers with the addition of Air Premia and completed the rollout of service to five previously announced new destinations with the launch of Anchorage in May. Jones said future capacity growth will be modest and focused on Southwest’s “points of strength,” including markets where it already has leading positions. He said the airline is not prepared to provide full-year 2027 capacity guidance but will continue to emphasize capacity discipline and profitable deployment of aircraft. Throughout the call, executives said demand and pricing remain strong. Jordan said industry recapture of higher fuel costs has been swift and pricing has remained sticky. He also said the revenue strength is not only related to fuel recovery, but reflects benefits from Southwest’s own initiatives. Jones said the third quarter was about 65% booked at the time of the call, with yields running up 24% year over year compared with 13% for the second quarter at the same point. “There is no deceleration in the strength in the demand, no deceleration in the strength in the revenues and the fares,” he said. Jordan said he remains optimistic about consumer demand for travel and the long-term durability of Southwest’s revenue base. He pointed to growth in managed business revenue, Rapid Rewards memberships, card acquisitions and customer engagement as evidence that the company’s changes are resonating. Southwest also accrued more than $100 million year to date in profit sharing for employees. Jordan thanked employees and said the results show “proof in the earnings” that the company’s transformation is working. Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest's operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis. Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Southwest Airlines Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Southwest Airlines Co. (LUV) reported second-quarter 2026 adjusted earnings of 94 cents per share, up 118.6% year over year and 80.8% above the Zacks Consensus Estimate of 52 cents. Record operating revenues of $8.43 billion rose 16.4% but missed the consensus mark of $8.58 billion by 1.7%. Results benefited from demand for enhanced products, record managed business revenues and cost discipline despite an $889 million increase in fuel expense. Adjusted unit revenues jumped 20.1%, while adjusted operating margin expanded 3.3 points to 6.7%. Southwest Airlines Co. price-consensus-eps-surprise-chart | Southwest Airlines Co. Quote Passenger revenues, which accounted for 91.9% of the top line, increased 16.9% year over year to $7.75 billion. The improvement reflected higher fares and strong customer response to Southwest Airlines’ expanded commercial offerings. Freight revenues rose 13.6% to $50 million. Other operating revenues increased 11.2% to $637 million, providing another source of growth beyond ticket sales. Revenue passenger miles, a measure of traffic, increased 1.2% year over year to 37.35 billion. Capacity, measured in available seat miles, edged up only 0.2% to 47.09 billion, allowing demand growth to outpace supply. The load factor improved 0.8 percentage points to 79.3%. Average passenger fare climbed 20.9% to $225.61, while passenger revenue per available seat mile advanced 16.7% to 16.45 cents. Revenue passengers carried declined 3.3% to 34.3 million. Total operating expenses increased 16.1% year over year to $8.15 billion. Aircraft fuel and related taxes surged 67% to $2.22 billion, representing the largest cost headwind during the quarter. Fuel cost per gallon increased 69% to $3.92. Still, cost per available seat mile, excluding fuel, special items and profit sharing, rose a more moderate 3.4% to 12.45 cents, coming in below the company’s prior guidance. Adjusted operating income climbed 138.8% to $585 million. Reported operating income increased 26.7% to $285 million despite the sharp rise in fuel costs. Managed business revenues reached a quarterly record and increased 30% year over year. The performance highlighted stronger demand from corporate customers and broadened the company’s revenue mix. Rapid Rewards enrollment rose 35%, while the loyalty program reached nearly 100 million members and posted record tier qualifiers. Acquisitions for the Chase co-branded credit card accelerated 28%, with double-digit growth in every month of the quarter. Southwest Airlines also completed service rollouts to five new destinations and added Air Premia as its ninth airline partner. The carrier operated its first aircraft equipped with Starlink connectivity during the quarter. Southwest Airlines ended June with cash and cash equivalents of $3.79 billion, up from $3.23 billion at the end of 2025. Total liquidity was $5.3 billion, including a $1.5 billion revolving credit facility. Net cash provided by operating activities rose to $530 million from $401 million a year earlier. Capital expenditures totaled $818 million, while proceeds from property and equipment sales reached $258 million. The company paid $88 million in dividends during the quarter. It ended the period with $3.79 billion of long-term debt, excluding current maturities, and reported gross leverage of 2.1 times. For third-quarter 2026, Southwest Airlines expects adjusted earnings of 50-75 cents per share. The Zacks Consensus Estimate is pegged at 77 cents per share. Capacity is projected to decline 1% to remain flat, while unit revenues are forecasted to increase 17.5-19.5% year over year. Third-quarter cost per available seat mile, excluding fuel, special items and profit sharing, is expected to rise 3.5-4%. Fuel cost per gallon is projected to be between $3.70 and $3.75. For 2026, management expects adjusted earnings of $3.25-$4.25 per share, replacing its prior expectation of at least $4. The Zacks Consensus Estimate is currently pegged at $3.23. Capacity growth is now forecasted to be roughly 1.5%, down from 2%. Net capital spending is expected near the low end of, or below, the previously announced $3-$3.5 billion range. Currently, LUV carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Delta Air Lines (DAL) reported second-quarter 2026 earnings (excluding 88 cents from non-recurring items) of $1.56 per share, beating the Zacks Consensus Estimate of $1.51. Earnings declined in double digits (% wise) from a year ago as sharply higher fuel costs pressured profitability. Revenues rose on a year-over-year basis to $17.67 billion but missed the consensus estimate of $17.76 billion. Broad demand strength lifted adjusted total revenue per available seat mile, or TRASM, 12.4%, while premium and diversified revenue streams continued to expand. United Airlines Holdings, Inc. (UAL) reported second-quarter 2026 adjusted earnings of $1.99 per share, down 48.6% year over year but above the Zacks Consensus Estimate of $1.92 by 3.7%. Operating revenues rose 16% to $17.67 billion and were essentially in line with the $17.68-billion consensus mark. A 12.1% increase in total revenue per available seat mile, or TRASM, and broad-based gains across premium, loyalty and cargo revenues supported the top line despite sharply higher fuel costs. J.B. Hunt Transport Services, Inc. (JBHT) reported second-quarter 2026 earnings of $1.91 per share, up 45.8% from $1.31 a year ago. The figure beat the Zacks Consensus Estimate of $1.71 by 11.7%. Operating revenues climbed 19.4% year over year to $3.50 billion and surpassed the consensus mark of $3.19 billion by 9.5%. Higher volumes and pricing across several businesses supported growth, led by a 10% increase in Intermodal loads. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Southwest Airlines Co. (LUV) : Free Stock Analysis Report Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report United Airlines Holdings Inc (UAL) : Free Stock Analysis Report J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. After-Tax Return on Invested Capital: 9%. Adjusted Operating Margin: 6.7%, a 3.3 point improvement year-over-year. Operating Cash Flow: Nearly $2 billion in the first half of the year. Adjusted Earnings Per Share: $0.94, up approximately 120% year-over-year. Adjusted Unit Revenues: Increased 20.1% year-over-year to an all-time quarterly record. Adjusted Operating Revenues: Increased 20.3% on capacity growth of 0.2%. Managed Business Revenues: Grew 30% year-over-year to a new all-time quarterly record. Rapid Rewards New Member Enrollments: Increased 35% year-over-year. Chase Co-Branded Credit Card Account Growth: Card acquisitions up 28% year-over-year. CASM-X: Increased 3.4% year-over-year. Full-Year 2026 Adjusted Earnings Per Share Guidance: $3.25 to $4.25. Profit Sharing Accrued Year-to-Date: Over $100 million. Adjusted Operating Revenue: $8.7 billion, the highest quarterly revenue in Southwest history. Third Quarter Unit Revenue Growth Expectation: 17.5% to 19.5% year-over-year. Quarterly Operating Cash Flow: $0.5 billion, more than 32% higher year-over-year. Liquidity at Quarter End: $5.3 billion. Gross Leverage Ratio: 2.1x. Fuel Prices: Averaged $3.92 per gallon during the quarter. Third Quarter CASM-X Expectation: Increase 3.5% to 4% year-over-year. Warning! GuruFocus has detected 8 Warning Sign with EGP. Is LUV fairly valued? Test your thesis with our free DCF calculator. Release Date: July 23, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Southwest Airlines Co (NYSE:LUV) reported a 9% after-tax return on invested capital and an adjusted operating margin of 6.7%, marking a 3.3 point improvement year-over-year. The company achieved a 120% year-over-year increase in adjusted earnings per share, reaching $0.94, surpassing both initial guidance and analyst consensus. Managed business revenues grew 30% year-over-year to a new all-time quarterly record, indicating strong customer response to enhanced product offerings. Southwest Airlines Co (NYSE:LUV) maintained the lowest customer complaint rate among major US airlines and was named #1 in customer satisfaction among economy passengers in the JD Power 2026 North America Airline Satisfaction Study. The company generated nearly $2 billion in operating cash flow during the first half of the year despite record fuel expenses, demonstrating strong financial management. Southwest Airlines Co (NYSE:LUV) faced a nearly $900 million year-over-year increase in second quarter fuel expenses, impacting overall costs. The company anticipates a headwind from lapping 2025 initiatives, such as bag fees, which could affect third-quarter unit revenue growth. Despite strong performance, the company is cautious about volatile and elevated fuel prices, which remain a concern for future financial performance. Operational challenges include improving on-time performance, particularly during high load factor periods, which has led to smaller delays. The company faces competitive pressures in key markets, such as San Diego, where industry capacity growth has been significant. Q: Can you elaborate on the impact of the unit revenue initiatives in Q3 and how it progresses into 2027? A: Robert Jordan, CEO: Our Q2 unit revenue was up 20%, far ahead of the industry. The Q3 RASM guide includes a headwind from initiatives like bag fees, which alone contribute about $1 billion annually. Adjusting for these, our Q3 unit revenue guide would be ahead of Q2. Demand remains strong, and we expect modest growth moving forward, focusing on strengthening our network's points of strength. Q: Can you provide details on the new 2026 EPS outlook, particularly regarding fuel and CASM in Q4? A: Tom Doxey, CFO: We don't guide fuel but provide estimates based on the forward curve. For nonfuel costs, we've achieved significant savings across the business. Regarding fleet transactions, we expect elevated activity in Q3 compared to Q1 and Q2, with Q4 resembling Q1 and Q2. Q: How are you addressing the increase in delays despite a strong completion factor? A: Andrew Watterson, COO: We've improved in several operational metrics, but on-time performance (OTP) has been affected by large-scale weather events and smaller day-to-day delays. We're focusing on optimizing the last 10 minutes of the turn process to improve OTP, with benefits expected by the holiday season. Q: What are the main drivers of the cost beat in the quarter, and how should we think about CASM in Q4? A: Tom Doxey, CFO: Cost savings are broad-based, including technology, supply chain, and maintenance efficiencies. Nonfrontline headcount costs remain flat, and frontline efficiency has improved. Gains from aircraft sales are included in our EPS guide. Q: How do you view demand durability in the long term, and what are the concrete data points supporting this? A: Robert Jordan, CEO: The consumer is resilient, prioritizing travel even with higher pricing. Our product changes are resonating with customers, evidenced by increased engagement and loyalty metrics. We will continue to optimize and expand our offerings, driving future demand and revenue. For the complete transcript of the earnings call, please refer to the full earnings call transcript.