Southwest says ‘results are showing’ from transformation with record Q3 revenue
October 23, 2025
Southwest Airlines has posted strong third-quarter results, with unit revenues, operating costs, and net income all exceeding expectations.
The positive results for the low-cost Dallas-based carrier come on the back of a major overhaul of its business model, including the introduction of seat assignment and baggage fees.
The carrier posted operating revenues of $6.9 billion, marking a record for the period, alongside net income of $54 million.
Most significant transformation in Southwest Airlines’ history
Bob Jordan, president, CEO and vice chairman of Southwest Airlines, said that after having executed the “most significant transformation in Southwest Airlines’ history … the results are showing”.
He added: “We delivered a profitable quarter, with both unit revenues and unit costs performing better-than-anticipated. These significant accomplishments reflect the strength of our plan, the quality of our execution, and the dedication of our team.”
He added that early indications are that Southwest’s new extra legroom and assigned seating products are performing in line with expectations.
Third-quarter passenger revenues increased 1% year-over-year to $6.3 billion, supported by a sustained uptick in demand from early July.
Operating expenses for the quarter rose 1.2% to $6.9 billion, while unit costs, excluding fuel, special items, and profit sharing, were up 2.5% year-over-year, better than anticipated due to what Southwest said was disciplined cost control.
Fuel expenses averaged $2.40 per gallon, with fuel efficiency improving 2.4% through increased utilisation of modern Boeing 737 MAX 8 aircraft.
Changes at Southwest, from assigned seating to new cabins
The airline has attempted to improve profitability through a major shakeup in a bid to increase ancillary sales, including charging for checked hold bags and launching assigned seats for passengers.
The airline’s unique first-come-first-served policy ended in July, with customers given assigned seats instead.
Southwest Airlines also recently entered the package holiday market with the launch of its new in-house product, Getaways by Southwest.
Last week, Southwest Airlines launched a new passenger experience with the delivery of its first aircraft featuring its new cabin design.
The Boeing 737 MAX 8 (tail number N8972S) began commercial service on 16 October, with new seats and a new colour palette as well as features to modernise the flying experience for Southwest’s customers.
The airline has refreshed the carpeting, updated the lighting, and added design accents, including its signature heart logo on the bulkheads. The Southwest heart also appears in an abstract pattern on the new carpet.
Growth forecast for rest of 2025
Looking ahead, Southwest expects fourth-quarter 2025 unit revenues to increase 1–3% year-over-year, on capacity growth of roughly 6%.
The airline anticipates all-time quarterly record operating revenues, driven by strong demand and accelerated contributions from its transformation initiatives.
Fleet developments continue to underpin growth and operational efficiency. Southwest received eight Boeing 737 MAX-8 deliveries and retired 16 aircraft during the quarter, ending September with a fleet of 802.
Retrofits for extra-legroom seating on over 400 aircraft have been completed, with remaining modifications on -700s shifted to January 2026 to maximise holiday revenue potential.
The carrier now expects 53 MAX-8 deliveries and 55 aircraft retirements in 2025.
Featured image: Southwest Airlines
