Southwest Airlines is set to report Q3 2026 earnings on Oct. 21 with an EPS estimate of 61 cents per share. While solid bookings are expected to drive revenues up 18.83% to $8.26 billion, high fuel costs, escalated labor expenses, and rising operating costs (up 9.1%) are likely to pressure profitability. The company's earnings surprise model does not conclusively predict a beat this quarter.

Southwest Airlines is expected to report Q3 2026 earnings of $0.61 per share with an 18.8% revenue increase, but a negative Earnings ESP of -4.13% combined with a Zacks Rank #3 makes an earnings beat uncertain. United Airlines faces similar headwinds with a -0.33% Earnings ESP and Zacks Rank #5 (Strong Sell), despite a strong historical track record of beating estimates.

The U.S. Global Jets ETF (JETS) offers exposure to global airline companies with a 0.6% expense ratio and $778.07 million in assets. However, the fund carries high risk with a beta of 1.22 and 31.05% standard deviation over three years. Year-to-date performance shows a 4.52% loss, though it gained 8.81% over the past 12 months. The ETF holds a Zacks Rank of 3 (Hold) and is concentrated in major carriers like Southwest Airlines, Delta, and United Airlines.

Delta Air Lines cut its 2026 adjusted earnings forecast by nearly 25% due to surging jet fuel prices driven by the Iran war, with expected annual fuel costs up $6 billion from 2025. Despite record revenue and strong travel demand, rising fuel expenses are squeezing airline profitability across the sector. Airlines may need to restrain capacity growth in 2027 to protect margins, with other major carriers set to report Q3 earnings showing mixed results.

Southwest Airlines has been downgraded to a Zacks Rank #5 (Strong Sell) as surging fuel costs squeeze margins and erode profitability. The airline reduced full-year EPS guidance to $3.25-$4.25 from above $4.00, cut capacity growth plans in half, and analysts have lowered estimates across the board. While demand remains strong and new revenue initiatives show promise, fuel cost increases are outpacing pricing power, with the company booking only 60 days in advance.

Chevron (CVX) is named Zacks Bull of the Day with a Strong Buy rating, driven by surging crude prices, record production from the Hess acquisition, exceptional Q2 earnings, and strong free cash flow. Southwest Airlines (LUV) is named Bear of the Day with a Strong Sell rating due to elevated fuel costs outpacing revenue gains, reduced guidance, and falling analyst estimates despite improved business model initiatives.

Southwest Airlines has launched a ChatGPT plugin in partnership with OpenAI and AWS to enable conversational flight discovery and shopping. The initiative represents a strategic shift toward AI-driven travel planning, allowing customers to book flights directly within ChatGPT. Despite strong stock performance (31.1% gain over the past year), Southwest currently holds a Zacks Rank #5 (Strong Sell) rating.

Zacks has added three stocks to its Strong Sell list today: Ardelyx (ARDX), a biopharmaceutical company with a 53.9% downward earnings revision; Southwest Airlines (LUV), a passenger airline with a 4.1% downward earnings revision; and Collegium Pharmaceutical (COLL), a specialty pharmaceutical company with a nearly 3% downward earnings revision over the last 60 days.

July 23, 2026 marked a record day for commercial air travel with 153,359 flights worldwide. U.S. carriers Delta, United, and Southwest all posted strong Q2 results and are outperforming the broader market in 2026. However, rising jet fuel costs remain a significant risk factor, as fuel accounts for 20-30% of airline operating expenses.

The FAA finally certified Boeing's 737 MAX 7 on Monday, seven years after the original 2019 target. The certification clears the way for Boeing to deliver approximately 30 completed aircraft in storage. While the approval is significant for unlocking revenue, the stock's 8% rally was also driven by cheaper oil and a BNP Paribas upgrade. The analyst suggests most of the positive impact is already priced in, with meaningful revenue impact expected in 2027.

The article compares two aerospace ETFs: Invesco Aerospace & Defense (PPA) and U.S. Global Jets (JETS). While JETS has outperformed recently due to small-cap rally strength (up 46.1% in 52 weeks vs PPA's 25.4%), PPA demonstrates superior long-term performance with a 17.8% annualized return over the past decade compared to JETS' 5.2%. PPA offers lower volatility (0.74 beta vs 1.20), broader diversification across defense contractors and aerospace manufacturers, and a lower expense ratio. Despite PPA's stronger fundamentals, the article recommends JETS as the better buy, citing the historic small-cap rally and belief that small caps will continue outperforming.

The article compares two aerospace ETFs: MISL (defense-focused) and JETS (airline-focused). Both charge 0.60% expense ratios, but MISL has outperformed with 27.10% 1-year returns and lower volatility (beta 0.67), while JETS returned 40.70% but with higher risk (beta 1.17). MISL benefits from surging global defense spending, while JETS faces headwinds from rising fuel costs and geopolitical disruptions. The choice depends on whether investors favor predictable defense contracts or airline recovery potential.