Southwest Airlines Company

Redburn upgraded Southwest Airlines to Neutral from Sell while reiterating Buy ratings on Delta and United, citing a strong sector backdrop. Analyst James Goodall said results through the first half of 2026 confirmed strong leisure and premium demand and acceptance of higher domestic fares, and he expects lingering capacity constraints, softer low-cost carrier competition and premium strength to drive continued unit revenue growth into next year. Redburn lifted its jet fuel cost forecasts materially above consensus, seeing downside to 2026 earnings across the sector, though it argued that is largely priced in after recent share price falls. Its 2027 forecasts are ahead of consensus for Delta and United, with target prices of $105 and $150 respectively, while Southwest carries a $40 target and American keeps a Neutral rating and a $13.50 target on greater fuel-price sensitivity.

Southwest Airlines disclosed plans on September 2 to open its first-ever airport lounges, partnering with JPMorgan Chase on a new premium co-branded credit card launching in 2027 that will provide access. The first four lounges will open at Austin, Baltimore, Honolulu, and Nashville airports in late 2027, part of a longer-term plan for a network of at least 11 locations. The move continues Southwest's shift away from its historic no-frills model of free bags, open seating, and a single cabin, having already introduced assigned and tiered seating and bag fees for most passengers. CEO Bob Jordan has separately signaled Southwest could eventually add cabin options including true first class and long-haul international flying, though he described those as still just ideas. The transformation continues under pressure from activist investor Elliott Investment Management following weaker post-pandemic margins and comes as rising fuel costs from the U.S.-Israel-Iran conflict squeeze industry-wide airline margins.

Southwest Airlines Co. announced plans for its first-ever airport lounge network, partnering with Chase to create premium lounges that blend Southwest's hospitality with the Chase Sapphire Reserve Lounge Network. Construction has begun on the first four lounges, set to debut in late 2027 at Austin-Bergstrom International Airport, Baltimore/Washington International Thurgood Marshall Airport, Daniel K. Inouye (Honolulu) International Airport, and Nashville International Airport, with at least seven more lounges planned across high-demand markets. Access will be provided through a new premium Southwest Rapid Rewards credit card issued by Chase, launching in 2027. Tony Roach, Executive Vice President and Chief Customer & Brand Officer, called the lounges a strategic investment in Rapid Rewards that deepens the 30-year partnership with Chase.

Southwest Airlines reported second quarter 2026 adjusted earnings of $0.94 per share, exceeding estimates and supported by strong passenger revenues and record managed business revenue. The company also issued guidance for the third quarter and full year 2026 pointing to continued adjusted earnings and revenue growth alongside cost discipline. Despite the solid Q2 report, Southwest Airlines shares have been under pressure recently, with a 30-day share price return of down 15.27% and a year-to-date share price return of down 2.23%, while the 1-year total shareholder return of 25.54% and 3-year total shareholder return of 38.03% indicate longer-term holders have still seen gains. The most followed narrative for Southwest Airlines points to a fair value of $51.79 compared with the latest close at $40.38, implying a 22% undervaluation based on its own assumptions. Planned introduction of premium and assigned seating, along with basic economy offerings, can enhance revenue yield through differentiated pricing strategies, potentially boosting net margins and overall earnings.

Global commercial flights reached a new single-day record of 153,359 on July 23, according to tracking data, underscoring robust demand that has lifted major U.S. airline stocks. Delta Air Lines, United Airlines Holdings, and Southwest Airlines all reported strong second-quarter results in July, with Delta beating revenue and earnings expectations and projecting full-year 2026 income of about $73 billion, 15% above 2025 levels. United raised its full-year earnings forecast to $9 to $11 per share, while Southwest posted earnings of $0.94 a share on revenue of $8.72 billion, exceeding analyst estimates. Despite the positive performance, rising jet fuel costs remain a risk, with United warning that higher fuel prices could add up to $6 billion to its expenses this year and Southwest noting it has raised fares in response. Jet fuel typically accounts for 20% to 30% of an airline's operating expenses, and further spikes tied to Persian Gulf tensions could pose headwinds.

The Federal Aviation Administration has certified the Boeing 737 MAX 7, the smallest member of the MAX family, marking the first new aircraft certification for Boeing since the MAX crashes. The approval follows a lengthy regulatory review and clears a path for deliveries to Southwest Airlines, a key customer for the MAX 7. The decision directly affects Boeing's commercial aircraft business, which depends on narrowbody jets as a core revenue source. With deliveries to Southwest now possible, investors can focus more on execution risks around production quality, delivery timelines, and customer support. The certification arrives shortly after Boeing's second quarter 2026 results, where revenue was US$24,560 million and the company reported a loss of US$444 million.

Southwest Airlines announced new benefits for its Southwest Business program, including a Business Priority product and New Distribution Capability connectivity. The Business Priority option, available in early 2027 for qualified corporate travel agreements, will offer preferred reaccommodation, standby, and boarding benefits. Southwest is also introducing NDC capabilities, with an evolved in-house API expected by the end of 2026 and Amadeus Altéa NDC connectivity anticipated later in 2027. These moves aim to give corporate buyers greater flexibility and access to Southwest's fare products and seating ancillaries through third-party booking tools.

Southwest Airlines has entered an interline partnership with Air Premia and a long-term payment collaboration with Klarna Group plc, extending its network to over 120 U.S. destinations for Korean travelers and offering U.S. customers flexible payment options including installments and financing. The Air Premia deal opens East Asian access to Southwest's domestic network, while the Klarna agreement broadens the airline's payment ecosystem. These moves are part of Southwest's strategy to reach more customers through more channels, alongside expanded Expedia distribution, though they do not materially alter near-term reliance on fare product rollouts and cost control. The company's narrative projects $34.5 billion in revenue and $2.3 billion in earnings by 2029, requiring 6.1% annual revenue growth and a $1.5 billion earnings increase from $817.0 million.

Boeing is nearing FAA approval for a redesigned engine anti-ice system that could finally clear the 737 Max 7 and Max 10 for commercial service. The fix is in the final stages of certification, according to Reuters. Boeing has already built about 30 Max 7 jets and 9 Max 10s awaiting delivery, while the Max 10 has completed roughly 98% of its certification flight-testing program. The Max 10 represents more than 25% of Boeing's remaining 737 Max backlog, and approval could unlock years-delayed deliveries and support cash flow. Southwest Airlines is the largest Max 7 customer.

Jim Cramer said on Mad Money that Southwest Airlines has become more disciplined and is a terrific turnaround story. He noted that the low-cost carrier has been operating much more efficiently since activist Elliott Investment Management got involved in the summer of 2024. Southwest's stock has fallen about 25% in less than two months and is trading at less than 15 times this year's earnings estimates, even though earnings are expected to more than triple. Cramer pointed out that earnings estimates have already come down from over $4 per share to $2.86 per share, which is still more than three times last year's earnings. He also speculated that if big airlines are eager to consolidate, they might want to own Southwest.

Bank of America has raised price targets across the airline sector, citing steady demand, stronger fares, and reduced fuel costs that may support greater profitability into second-quarter results. The brokerage lifted its target for Delta Air Lines to $100 from $93 and for United Airlines Holdings to $150 from $145, while also boosting objectives on American Airlines, Southwest, Alaska Air, JetBlue, Frontier, and Allegiant. BofA now expects Delta's second-quarter unit revenue growth of 13.4% and third-quarter unit sales growth of 14.7%, with adjusted diluted EPS for 2026 estimated at $6.50, the low end of Delta's guidance range. For United, the firm projects second-quarter unit revenue growth of 13.5% and third-quarter growth of 15.6%, raising its 2026 EPS forecast to $11.15. The call is supported by airfare data showing a 26.7% year-over-year surge in May and a 15% increase in travel agency ticket sales, while jet fuel prices have declined roughly 35% from early April highs. However, BofA warns that domestic capacity is expected to rise 3.9% in October and 6.9% in November, which could erode unit-revenue gains if airlines do not remain disciplined.

Goldman Sachs and TD Cowen raised price targets on several major U.S. airlines, citing stronger revenue trends and a 21% drop in fuel costs over the past month. Goldman lifted its targets on Delta to $116, United to $162, Alaska to $69, American to $15, and JetBlue to $4.50, while TD Cowen raised its targets on American to $24 and Southwest to $53. The two firms diverge on American Airlines, with Goldman maintaining a Sell rating at a $15 target below the current price around $18, and TD Cowen keeping a Buy rating with a $24 target. Delta and United reported strong first-quarter results, with Delta posting adjusted earnings per share of $0.64 on revenue of $14.2 billion and United guiding full-year 2026 earnings per share to between $7 and $11. The U.S. Global Jets ETF, which bundles these carriers, is up 18% year to date.

Goldman Sachs raised its outlook on the airline industry, lifting its third-quarter and fourth-quarter 2026 net income forecast by 24% and 32% respectively, citing strong demand and a better competitive environment after Spirit ceased service in May. Analyst Catherine O’Brien raised price targets for several carriers, including Allegiant by 14% to $142, Alaska Air by 19% to $69, American Airlines by 50% to $15, Delta by 45% to $116, JetBlue by 28% to $4.50, Southwest by 17%, and United by 24% to $162. However, O’Brien downgraded SkyWest to Neutral from Buy and cut its price target by 14% to $108, warning that lower-than-expected industry capacity growth increases downside risk to SkyWest’s block hour production. She lowered her 2026 block hour growth forecast for SkyWest to 3.0% from 3.5% previously, and from 4.9% earlier this year, calling it a significant deceleration from recent years.

Southwest Airlines is set to report fiscal second-quarter 2026 earnings, with analysts expecting a profit of $0.50 per share, up 16.3% from $0.43 per share in the same quarter last year. The company has beaten or met earnings estimates in three of the past four quarters. For the full fiscal year ending in December, analysts forecast earnings of $2.93 per share, a 215.1% jump from $0.93 per share in fiscal 2025. Southwest shares have surged 58.5% over the past 52 weeks, far outpacing the S&P 500's 20.9% gain and the State Street Industrial Select Sector SPDR ETF's 25.6% return. Wall Street holds a Moderate Buy consensus on the stock, with 10 of 24 analysts rating it a Strong Buy and a Street-high price target of $65 implying 26.4% upside from current levels.

Southwest Airlines flew its first aircraft equipped with Starlink inflight Wi-Fi connectivity on June 22 on a flight between Dallas and Albuquerque. Chief Customer and Brand Officer Tony Roach said the ultra-fast Wi-Fi brings an at-home experience to the air. Southwest announced a partnership with Starlink in February to rapidly integrate the service into its fleet, with plans to make it available on 300 aircraft by the end of 2026. The carrier more recently said it will use a mix of low-Earth-orbit providers for its remaining fleet, suggesting it could tap Amazon, Viasat, and other smaller names. Shares of Gogo, a broadband provider to the aviation industry, have lost more than 80% of their value since the beginning of the year and fell another 2% on Thursday to a five-year low amid the proliferation of Starlink Wi-Fi across domestic carriers.

UBS said U.S. airline stocks are likely to shift back toward company-specific fundamentals after a macro-driven rally, as jet fuel prices fell 13% over three sessions and are about 40% below April peaks. The bank flagged a valuation gap between Delta Air Lines and United Airlines, noting Delta trades at more than twice United's 2027 earnings multiple, and said that spread could narrow if United's valuation improves while lower fuel prices support earnings. For more direct fuel exposure, UBS pointed to Alaska Air Group and American Airlines Group, estimating that a 10-cent drop in fuel prices would lift 2027 earnings per share by 13% for Alaska and 16% for American, versus smaller gains for Delta, United and Southwest Airlines. UBS kept Buy ratings on Delta, United, American and Alaska, while warning that higher valuations will likely require revenue strength, not just cheaper fuel.

PR Newswire released its weekly roundup of notable press releases for June 15-19, 2026, featuring 13 stories spanning media, education, retail, aviation, technology, food, healthcare, consumer goods, pharmaceuticals, defense, lifestyle, and transportation. Fox Corporation announced a deal to acquire Roku for $160.00 per share in a cash-and-stock transaction valuing Roku at approximately $22 billion in enterprise value. U.S. News unveiled its 2026-2027 Best Global Universities Rankings, while Urban Outfitters debuted its second annual Pride vinyl collection with 12 limited-edition releases from artists including Reneé Rapp and Kesha. United Airlines introduced a custom “Stars and Stripes” livery on Boeing 787-10 and 737-800 aircraft and marked a military pilot hiring milestone. SandboxAQ signed a definitive agreement with the U.S. Department of Commerce for a $500 million CHIPS R&D award to develop novel molecules and formulations for semiconductor manufacturing. McDonald’s announced the limited-time return of its Fried Apple Pie starting June 23. LifeNet Health, NASA, and UNOS completed a first-of-its-kind drone kidney transport study with preliminary findings showing no negative effects on the organs. Crayola introduced an ‘All Grown Up’ adult coloring line with alcohol-based markers, acrylic paint markers, and artist-designed coloring books. Lilly acquired 4E Therapeutics to advance a non-opioid approach to chronic pain. Lockheed Martin and GM Defense are collaborating to strengthen the U.S. manufacturing and defense industrial base. Wildlife conservationist Robert Irwin became the new face of The Lad Collective bedding brand. Southwest Airlines partnered with Amazon Web Services to accelerate AI capabilities and transition to a cloud-based architecture by 2028. Life360 and Uber partnered to help parents coordinate rides for teens.

Southwest Airlines is partnering with Amazon Web Services to modernize its technology architecture and become a fully cloud-based, AI-enabled airline by 2028. The carrier will move away from a largely on-premises environment, adopting tools such as AWS Kiro, an AI-powered integrated development environment, and Quick, an AI assistant and agentic workspace, to shorten development cycles, automate testing, and streamline cloud infrastructure creation. The transition aims to provide greater speed, flexibility, and reliability across operations that support more than 70,000 employees and 134 million travelers. AWS Vice President of Agentic AI Swami Sivasubramanian said the collaboration will deliver real, measurable results at scale by deploying AI agents across customer experience, operations, and software development.