Southwest Airlines's 10-Q: revenue up 14.5% over twelve months

Revenue over the twelve months to Q3 2026 reached $31.55 billion, a 14.5% increase on the year before. This growth rate improved by 5.0 percentage points compared to the rate recorded a quarter earlier.

The trailing operating margin stood at 4.4%, which is 3.2 percentage points higher than a year earlier. Net income over the twelve months totaled $1.05 billion, representing a 177.8% rise on the year before. The trailing net margin for the same period was 3.3%.

Cash flow

Cash generation increased, but capital spending outpaced it, resulting in negative free cash flow. Operating cash flow over the twelve months was $2.76 billion, up 36.2% on the year before. Capital spending reached $3.21 billion, equivalent to 10.2% of revenue. Consequently, free cash flow was −$449.0 million. The free-cash-flow margin was −1.4% of revenue, down 0.1 percentage points from a year earlier. The average diluted share count fell 13.1% over the year.

In context

Current performance metrics sit within specific ranges of the company’s historical data. Today’s free-cash-flow margin of −1.4% is higher than 23% of the company’s own past quarterly readings. Those past readings have ranged from −37.4% to 15.0%. Today’s operating margin of 4.4% is higher than 45% of the company’s own past quarterly readings. Those past readings have ranged from −51.1% to 21.8%. Today’s twelve-month revenue growth rate of 14.5% is higher than 81% of the company’s own past quarterly readings. Those past readings have ranged from −68.1% to 168.5%.

Guidance

The company provided specific targets for the upcoming period. For 4Q 2026, Adjusted EPS is guided to $0.55 to $0.80. ASMs are guided to increase 3% to 4% year-over-year. RASM is guided to increase 19% to 21% year-over-year. For the full year 2026, Adjusted EPS is guided to $2.60 to $2.85.

What to watch

The next filing will show whether the recent acceleration in revenue growth continues. It will also reveal if operating margins maintain their recent expansion. Investors will see how capital spending trends affect free cash flow generation.