Southwest Airlines (LUV) shares have gone up almost 24% so far this year, making it the best-performing major U.S. passenger airline during a time of strategic change. The stock hit a two-and-a-half-year high this week, even though profits fell by 42% in the first three quarters compared to 2024. This was because investors were hopeful about changes in the company’s operations.
Reasons for the Stock Surge Analysts say that the stock market rally was caused by Southwest’s change from its famous uniform model, which included assigned seating, basic economy fares, and ending free checked bags, rather than by high demand across the industry. Barclays recently raised its rating on LUV, predicting adjusted earnings of more than $4 per share by 2027. Raymond James says these steps are key to the stock’s outperformance. Shares recently traded for about $42. The price has ranged from $23.82 to $43.54 in the last 52 weeks, and the market cap is close to $17 billion.
Profits fell sharply due to industry headwinds, yet revenue grew to $27.48 billion in 2024, up 5.34% year-over-year. The results for Q3 2025 were the best ever, with stronger demand forecasts. However, YTD gains are not as good as those of Delta and United, which are both up about 17%.
Analysts agree that LUV should be held at a price target of $33–34, which means there is only a small chance of it going up from here. People are still hopeful about 2026, and they think that shares will go up as the sector recovers.
