Southwest Airlines has cut its 2026 adjusted earnings per share guidance to a range of $2.60 to $2.85, well below the $3.25 to $4.25 range it set in July, according to Skift. The Southwest profit guidance cut comes as the carrier points to rising jet fuel prices as the main driver behind the lower outlook.
The airline now expects to pay about $4.55 per gallon for jet fuel in the fourth quarter, based on prices as of Oct. 15, according to its third-quarter earnings release. That follows a third quarter in which Southwest paid $3.92 per gallon, well above the $3.70 to $3.75 it had projected.
The Details Behind The Southwest Profit Guidance Cut
Despite the lower profit forecast, Southwest’s underlying business is still growing. The carrier posted record third-quarter operating revenue of $8.4 billion, a 21.2% jump from a year earlier, along with net income of $270 million, according to Skift.
Southwest isn’t the only carrier feeling the squeeze. United Airlines is budgeting roughly $4.80 a gallon for the fourth quarter, and Alaska Airlines is planning for somewhere between $4.65 and $4.85, Skift reported. The figures suggest the fuel cost pressure Southwest cited is affecting the broader industry, not just one carrier.
Southwest Chief Financial Officer Tom Doxey hinted at how the airline plans to cope. Speaking at Morgan Stanley’s Laguna Conference in September, Doxey indicated Southwest still had room to push fares higher to help cover rising fuel bills, Skift noted.
What It Means For Travelers
The profit guidance cut hasn’t changed Southwest’s broader growth strategy. The airline is still pursuing an upmarket push that includes its first airport lounges, branded Southwest Icon Lounges, with initial locations planned for Austin, Baltimore, Honolulu and Nashville starting next year. Executives said the name is a nod to figures from the airline’s past, such as co-founder Herb Kelleher, according to The Points Guy. Lounge access will be tied to a new premium credit card Southwest is developing with Chase.
Southwest is also overhauling its Rapid Rewards loyalty program. Starting Jan. 1, 2027, every Southwest-branded credit card will earn one tier qualifying point for each dollar spent, making everyday purchases count toward elite status. A-List and A-List Preferred will become Silver and Gold, and a new top tier, Platinum, will include the Companion Pass. Reaching Platinum will take 100 qualifying flights or 140,000 tier qualifying points, up from the 135,000 points the Companion Pass requires today. Southwest is also retiring Companion Pass Qualifying Points, which means credit card sign-up bonuses will no longer count toward the pass.
Flight earnings are shifting, too. Choice Extra, Southwest’s highest fare class, drops from 14 points per dollar to 10, while Choice Preferred falls from 10 to eight. Elite bonuses move in both directions. Silver members will get a 40% bonus, up from the 25% A-List members get now, and Platinum members will earn 120%. Gold members, however, will see their bonus shrink to 60% from the 100% A-List Preferred members currently receive.
Starting next spring, members will also be able to earn and redeem Rapid Rewards points on long-haul flights with partners Icelandair, Etihad Airways and China Airlines, according to The Points Guy. On board, Southwest has Starlink Wi-Fi on more than 40 planes so far and expects to finish installing it across the fleet by fall 2027.
Context On Southwest’s Long-Haul Ambitions
Southwest CEO Bob Jordan said in May that eight to 12 long-haul destinations could cover much of where the airline’s customers want to travel, part of the carrier’s push beyond its traditional domestic, point-to-point model. Reuters reported Oct. 8 that Southwest is leaning toward the Boeing 787 Dreamliner as its first widebody jet, though the airline said it had no fleet news to announce.
The combination of a reduced profit outlook and an expanding premium strategy marks a notable moment for an airline long associated with low-cost, no-frills service. The loyalty program changes detailed by The Points Guy show Southwest leaning further into elite tiers and lounge access even as fuel costs squeeze its bottom line.
What’s Next For Southwest
Southwest will host a Capital Markets Day in New York City on March 2, 2027, where it plans to share its multiyear financial framework and the targets it is working toward. The new Rapid Rewards tiers and Companion Pass threshold take effect Jan. 1, 2027, with long-haul partner awards following in the spring.
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