Southwest Airlines achieved a significant milestone this week, reporting first-quarter financial results after fully implementing an 18-month transformational plan.
The Dallas-based low-cost carrier reported operating revenues of $7.2 billion, a first-quarter record and up 12.8 percent year-over-year.
Other Q1 highlights included net income of $227 million and $0.45 earnings per share, which were in line with guidance.
The carrier's operating margin of 4.6 percent marked an improvement of 8.1 points year-over-year, while Southwest generated $1.4 billion in operating cash flow in the quarter and saw record first‑quarter passenger, operating and unit revenues.
Southwest said that approximately 60 percent of customers upgraded from the base product in the first quarter of 2026, up from approximately 20 percent in 2025. What's more, Rapid Rewards loyalty program engagement strengthened, with enrollments up 37 percent and tier‑status earners increasing 62 percent, year-over-year.
Southwest Airlines plane at Phoenix Sky Harbor International Airport. (Photo Credit: Patrick Clarke)
"First quarter 2026 marked a turning point for Southwest, as our broad set of commercial, operational, and cost initiatives is now translating into terrific results," President and CEO Bob Jordan said in a statement.
"Demand for our new product offerings drove record first quarter revenues, double‑digit unit revenue growth, and significant improvement in earnings and margins. These results were achieved despite significantly higher fuel costs, underscoring the momentum across the business and the strength of our transformed business model."
Q1 2026 saw Southwest roll out one of its biggest changes in introducing assigned seating.
"Our customers have embraced and value our new products, and that is reflected in our financial performance," added Jordan. "Demand continues to be strong, and we remain focused on controlling what we can control by managing costs, optimizing revenue initiatives, and directing capacity toward higher‑return opportunities. While the external environment remains uncertain, we are confident in our positioning and the strong momentum we are seeing at Southwest."
Looking ahead to the second quarter, Southwest will continue to navigate rising jet fuel costs. It joined other U.S. airlines in raising checked bag fees to help offset the rise earlier this month and anticipates its second quarter 2026 fuel cost per gallon to be between $4.10 and $4.15, up from $2.73 per gallon in Q1.
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