Southwest Airlines holds a Zacks Rank #5 (Strong Sell) as surging fuel costs pressure the carrier's outlook. Southwest absorbed nearly $900 million in additional fuel expense year over year in the second quarter alone, and its Q3 guidance assumed jet fuel of $3.70 to $3.75 per gallon based on the forward curve as of July 17, an assumption now at risk after oil moved sharply higher. The company reported Q2 adjusted earnings of $0.94 per share on July 22, beating the $0.52 consensus, but revenue of $8.43 billion missed expectations of $8.58 billion, and it guided Q3 earnings to $0.50 to $0.75 per share, below the $0.77 consensus at the time, while widening full-year EPS guidance to a range of $3.25 to $4.25 from its prior call of more than $4.00. Capacity growth for 2026 has been cut roughly in half from the original plan of 2% to 3%, and over the last 60 days the current-year consensus has dropped from $3.41 to $3.16 while next year's estimate fell from $5.44 to $5.04. Southwest reports Q3 results after the close on October 21, with the Earnings ESP at -9.84% and the Most Accurate Estimate of $0.57 below the $0.63 consensus.
Southwest Airlines CompanySurging jet fuel costs (input supply) pressure Southwest's guidance, prompting a Zacks #5 Strong Sell and cut capacity growth
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