Southwest Airlines reported a 21.2% rise in third-quarter operating revenue to $8.422 billion and net income of $270 million, according to its 21 October 2026 results release. The airline’s sales and operating margin improved despite an $821 million increase in fuel expense from a year earlier. Its reported profit and adjusted profit, however, are different measures and should not be presented as the same result.
The financial statements cover the three months ended 30 September 2026, with comparisons against the same period in 2025. All monetary amounts in this report are US dollars. The announcement date is 21 October; the date of CapKet’s source check is not a new quarter-end or a new company announcement.
Southwest’s reported and adjusted results
| Measure | Q3 2026 | Q3 2025 | Official source |
|---|---|---|---|
| Operating revenue | $8.422 billion | $6.949 billion | Issuer financial exhibit |
| Net income, reported | $270 million | $54 million | Issuer financial exhibit |
| Diluted EPS, reported | $0.55 | $0.10 | Issuer financial exhibit |
| Adjusted net income | $328 million | $58 million | Issuer release and reconciliation |
| Adjusted EPS | $0.66 | $0.11 | Issuer release and reconciliation |
| Fuel and related taxes | $2.152 billion | $1.331 billion | Issuer financial exhibit |
What the adjustment changes
Reported net income is the accounting result after the expenses recognized in the quarter. Southwest’s adjusted result excludes specified special items; it is a non-GAAP measure, meaning it does not follow the same basis as the headline reported accounts. Adjusted diluted EPS of $0.66 therefore supplements the reported $0.55 rather than replacing it.
The reconciliation identifies asset impairment, litigation accruals, and severance-related costs among the quarter’s operating adjustments. A reader comparing airlines should inspect which costs each company excludes, rather than assume every use of the word adjusted describes an identical calculation. CapKet’s Tesla earnings explainer illustrates the same reported-versus-adjusted reading discipline in another industry.
Fuel costs and margins moved together
Reported operating margin was 4.5%, compared with 0.5% a year earlier. The adjusted operating margin was 5.4%. These percentages describe the share of operating revenue left after the applicable operating expenses; they are not stock returns.
Fuel and related taxes rose from $1.331 billion to $2.152 billion. Subtracting those official figures gives the $821 million increase highlighted by the airline. Southwest reported a quarterly fuel cost of $3.92 per gallon. This is a company operating-cost figure for the period, not today’s commodity price.
The outlook is still conditional
Southwest projected full-year 2026 adjusted EPS of $2.60 to $2.85 and fourth-quarter adjusted EPS of $0.55 to $0.80. The guidance uses the fuel forward curve as of 15 October and assumes broadly stable fare conditions and demand trends. Its fourth-quarter fuel-cost assumption was approximately $4.55 per gallon, not a guaranteed future purchase price.
The company says it cannot reliably estimate all special items needed to reconcile those forecasts to future reported results. Actual fuel costs, demand and operating execution could differ from its assumptions. This report makes no claim about a share-price reaction or an assured investment outcome.
Official sources and verification
The 21 October issuer release was checked alongside the financial-results exhibit furnished with its Form 8-K. They contain the same company’s reporting, not independent corroboration. Source observations: release at 2026-10-22T11:47:13.075Z and exhibit at 2026-10-22T11:47:16.739Z. This is AI-assisted primary-document review, not independent human editorial approval.
Recorded source observation: . This is a source-check timestamp, not a market quote or a new article update.