Southwest Airlines Shares Up 5% After Q4 EPS Beat, Raises 2026 Outlook
Southwest Airlines reported Q4 2025 adjusted EPS of $0.58, beating estimates while revenue rose 7.4% year-over-year to $7.44B. Shares have climbed 5% since the report as the airline forecasts Q1 unit revenue growth ≥9.5%, adjusted EPS ≥$0.45, capacity up 1–2% and full-year EPS ≥$4.00.
1. Q4 2025 Financial Results
Southwest reported Q4 2025 adjusted EPS of $0.58, up 3.6% year-over-year, beating estimates. Total revenue reached $7.44 billion, a 7.4% increase, driven by passenger revenue of $6.78 billion, which rose 7.6% year-over-year.
2. Operating Metrics
Traffic in the quarter rose 3.2% to 35.56 billion revenue passenger miles while capacity grew 5.8% to 46.05 billion ASMs, causing load factor to dip to 77.2%. Passenger revenue per ASM increased 1.7% to 14.73 cents and overall RASM rose 1.5% to 16.16 cents.
3. Liquidity and Capital Allocation
Operating income totaled $391 million, up from $278 million a year ago, with adjusted operating income at $380 million. Cash and equivalents reached $3.23 billion, long-term debt stood at $4.57 billion, and the company generated $295 million in operating cash flow while spending $859 million on capital expenditures.
4. 2026 Outlook and Guidance
Management forecasts Q1 unit revenue growth of at least 9.5%, adjusted EPS of at least $0.45, and capacity growth of 1–2%, with CASM-X up nearly 3.5%. Full-year 2026 guidance includes capacity up 2–3%, adjusted EPS of at least $4.00, $3.0–3.5 billion in capital spending, and 66 Boeing 737-8 deliveries.