Southwest Airlines is boasting that its first quarter results prove that the airline's commercial transformation over the past year has worked.
"Customers love the product and it is transforming our financial results," CEO Bob Jordan said on a Thursday morning earnings call.
For the quarter, the carrier reported operating income of $330 million, reversing operating losses of $223 million a year earlier.
Southwest's operating margin of 4.6% was 8.1 percentage points better than the first quarter of last year. And the airline's revenue per passenger mile, or yield, was up 11.5% from 2025, driven by a mix of high airfares across the industry and its own new revenue and fare initiatives.
Most notably, those initiatives have included the implementation of seat assignment fees, the introduction of extra legroom seats, and the introduction of bag fees, as well as an unbundled basic economy fare.
Southwest chief operating officer Andrew Watterson said Thursday that approximately 60% of customers are buying up from the base fare now, compared to 20% in 2025.
Jordan said Southwest's results are proof that it can achieve top-of-industry financial results, even without long-haul flying, or premium cabins.
"Our existing customer base, and the new customers we are attracting, want and are willing to pay for our new products and our product attributes," Jordan said. "In other words, they love the Southwest product."
Load factor trails competitors
For the quarter, Southwest reported operating revenue of $7.25 billion up 12.8% from 2025. Operating expenses were up $6.92 billion, up a relatively modest 4% despite an 8.6% increase in fuel cost amid the surge in jet fuel prices.
One area of concern was load factor. Southwest filled 74.9% of its seats in the first quarter, well below the more than 81% of seats filled by American, Delta and United.
The airline's net income for the first quarter was $227 million.
Jordan acknowledged that expensive jet fuel might prevent Southwest from hitting its full-year earnings per share target of $4. To achieve the goal, fuel prices would need to go down, or revenue would need to go up, he said.