Southwest stock is up more than any other U.S. airline in 2025

Southwest Airlines Sees Stock Surge Despite Profit Decline

Southwest Airlines has experienced a significant surge in its stock price, with shares rising nearly 24% so far in 2025, outpacing other major US passenger carriers. This increase comes despite a 42% decline in the airline’s profit during the first nine months of the year compared to the same period in 2024. In contrast, industry leaders Delta Air Lines and United Airlines have seen their stocks rise by about 17% each this year.

The airline’s stock recently hit a 2½-year high, with analysts and investors expressing optimism about its future prospects. According to Savanthi Syth, an airline analyst at Raymond James, the initiatives implemented by Southwest, rather than the demand environment, are driving the stock’s growth. “What’s helping Southwest’s stock is clearly the initiatives, not the [demand] environment, because if it was you’d see it in all the other stocks as well,” Syth noted.

Transformation and New Initiatives

Southwest is undergoing a transformation, shifting from a one-size-fits-all airline to a more differentiated model, similar to its larger rivals. Starting January 27, the airline will introduce assigned seating on its all-Boeing 737 fleet, replacing the traditional open-seating policy. The first rows of seats will offer extra legroom for an additional fee, with prices varying depending on the route. For example, a Baltimore to Las Vegas flight in early February showed seats with extra legroom available for about $80 each way.

The airline forecasts that assigned seating and extra legroom seats could generate $1 billion in pretax earnings next year and $1.5 billion in pretax earnings in 2027. Southwest CEO Bob Jordan expressed confidence in the new initiatives, stating that the bookings reflect the business case for assigned seating and extra legroom. “Because the assigned seating, the extra legroom, kicks in and there’s a lot of value in that, of course, [results are] going to be better year over year,” Jordan said.

Analyst Upgrades and Outlook

Barclays recently upgraded Southwest’s stock, with transportation analyst Brandon Oglenski forecasting the airline’s adjusted earnings to exceed $4 per share next year and surpass $6 per share in 2027. The airline’s efforts to diversify its revenue streams and improve the passenger experience are expected to drive growth and increase profitability.

Southwest, like other airlines, faced challenges earlier this year due to decreased demand, prompted by factors such as President Donald Trump’s tariffs and cost-cutting measures in Washington. The government shutdown that ended last month also hurt demand, leading the airline to lower its earnings outlook for the year. However, with its new initiatives and transformation underway, Southwest is poised for a stronger performance in the future.