Southwest Airlines forecasts a surge in 2026 profits above expectations, with plans to introduce new moneymakers like bag fees and seat assignments. The airline expects to earn at least $4/share, exceeding analyst estimates, and predicts a 2-3% capacity growth compared to last year. Southwest’s stock rose over 5% in post-market trading after the report.

In the first quarter, Southwest anticipates a 9.5% increase in revenue per seat mile, higher than the 8.5% expected by analysts. The carrier also forecasts adjusted earnings of 45 cents for the first quarter, surpassing the 33 cents projected by Wall Street. The company is off to a strong start in 2026.

Southwest has made significant changes to its business model, including ending open boarding and implementing assigned seats with upcharges for certain spots. Last year, the airline began charging for checked bags and launched basic economy fares. Executives are exploring other ventures like airport lounges to boost profits.

Southwest’s fourth-quarter net income rose almost 24% from the previous year to $323 million, with revenue increasing by 7.4% to $7.44 billion. Adjusted earnings were $301 million or 58 cents per share, showing growth despite challenges like Winter Storm Fern impacting flights. The airline continues to focus on enhancing revenue streams and profitability.

Read more at CNBC: Southwest Airlines (LUV) 4Q 2025 earnings