Southwest Airlines Swings to $227M Profit in Q1 2026 as Revenue Jumps 13%
Southwest Airlines (NYSE: LUV), a major U.S. low-cost carrier, reported net income of $227 million for the three months ending March 31, 2026, reversing a $149 million loss in the same period a year earlier.
Southwest Airlines (NYSE: LUV), a major U.S. low-cost carrier, reported net income of $227 million for the three months ending March 31, 2026, reversing a $149 million loss in the same period a year earlier. The turnaround came as revenue climbed 13% to $7.25 billion from $6.43 billion in the first quarter of fiscal 2025. Read more earnings reports.
The airline posted operating income of $330 million for the quarter, a sharp reversal from an operating loss of $223 million in the prior-year period. Diluted earnings per share reached $0.45, compared to a loss of $0.26 per share a year earlier.
Passenger revenue, the company's largest revenue line, rose to $6.59 billion from $5.81 billion in the year-ago quarter. Other revenue categories showed mixed results: freight revenue increased to $57 million from $32 million, while other ancillary revenue jumped to $715 million from $245 million.
Operating Expenses and Margins
Labor and related expenses, the airline's largest cost category, climbed to $3.30 billion from $3.10 billion in the first quarter of 2025. The company recorded $398 million in depreciation and amortization, roughly flat compared to $396 million in the prior year.
Income tax expense for the quarter was $58 million, compared to a tax benefit of $43 million in the loss-making quarter a year earlier.
Balance Sheet and Cash Position
Total assets stood at $29.36 billion as of March 31, 2026, up from $29.06 billion at the end of December 2025. Cash and cash equivalents were $3.33 billion, compared to $3.23 billion three months prior. The cash position represents a significant decline from $8.13 billion held at March 31, 2025.
Current liabilities increased to $12.48 billion from $10.92 billion at year-end 2025. Stockholders' equity fell to $6.88 billion from $7.98 billion at December 31, 2025, reflecting a reduction driven primarily by financing activities.
Cash Flow Performance
Cash generated from operations totaled $1.42 billion for the quarter, up from $860 million in the same period last year. Investing activities consumed $445 million in cash, a reversal from positive cash from investing of $623 million in the prior-year quarter. Financing activities used $876 million, compared to $858 million a year earlier.
The company ended the quarter with 489 million shares outstanding, down from the weighted average of 498 million basic shares used for earnings calculations during the period. Basic shares outstanding were lower than the 584 million weighted average shares in the first quarter of 2025.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $7.25 billion | $6.43 billion |
| Operating Income (Loss) | $330 million | ($223 million) |
| Net Income (Loss) | $227 million | ($149 million) |
| Diluted EPS | $0.45 | ($0.26) |
| Cash from Operations | $1.42 billion | $860 million |
| Cash & Cash Equivalents | $3.33 billion | $3.23 billion |
The Dallas-based carrier operates as a large accelerated filer incorporated in Texas. Property, plant, and equipment totaled $20.38 billion at quarter end, up from $20.25 billion at December 31, 2025.