At the end of the day on Friday, Southwest Airlines ended the week beginning October 20 with its shares falling 4.79% to $32.20.
On Oct. 22, the Dallas-based airline posted third-quarter earnings of 11 cents per adjusted share. Revenue rose 1.1% to $6.95 billion, while forecasters’ averages predicted $6.92 and an adjusted loss of four cents.
Immediately following the announcement, Southwest shares fell 7.5% as investors remained unconvinced by CEO Bob Jordan’s message about how the airline’s decision to start charging passengers for checked bags and assigned seats has helped put it on a more profitable path.
“We are pleased with the performance of our initiative, which will continue to increase in the fourth quarter and next year, and although early, the indicators for our new assigned and extra legroom seating products are in line with expectations,” Jordan said in a statement about the results.
Southwest stock saw a slight rise after immediate earnings news broke, but is still significantly down as the airline struggles with both the market pressures facing the rest of the industry and its efforts to keep customers who used to choose it over its competitors for profits it has now eliminated.
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At the same time, American Airlines also released its third-quarter results this week with $13.7 billion in revenue and a forecast of between 45 and 75 cents per share in the final quarter of 2025. This is significantly higher than the average of 31 per share of analyst predictions and, despite the airline posting a total net loss of $114 million, the stock immediately skyrocketed in answer.
US stocks soared 8% immediately on October 23 and closed Friday markets up 7.9% at $13.78.
Investment research firm Zacks sent a note to investors saying it expects both Southwest and U.S. numbers to see growth in the fourth quarter and for the full year.
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“The downside is likely to have been partially offset by improving travel demand and lower fuel prices,” Zacks analysts wrote in a note to clients that also said they expect a 3.5% increase in American’s operating costs in recent quarters.