Why Southwest stock is falling while American Airlines is rising

At the end of the day on Friday, Southwest Airlines ended the week beginning October 20 with its stock down 4.79% to $32.20.

On Oct. 22, the Dallas-based airline posted third-quarter earnings of 11 cents per adjusted share. Revenue rose 1.1% to $6.95 billion, while forecasters’ averages predicted $6.92 and an adjusted loss of four cents.

Immediately following the announcement, Southwest shares fell 7.5% as investors remained unconvinced by CEO Bob Jordan’s message about how the airline’s decision to start charging passengers for checked bags and assigned seating has helped it move onto a more profitable path.

“We are pleased with the performance of our initiative, which will continue to accelerate in the fourth quarter and next year; and while it is still early, indicators for our new seating products with assigned seating and extra legroom seats are in line with expectations,” Jordan said in a statement on the results.

Southwest shares rose slightly after the immediate earnings news passed, but are still down significantly as the airline struggles with both the market pressures facing the rest of the industry and its efforts to retain customers who once chose the company over competitors because of benefits it has now eliminated.

Related: Budget airline that filed for Chapter 11 gets a surprise buyer

At the same time, American Airlines also released its third-quarter results this week with revenue of $13.7 billion and a forecast of between 45 and 75 cents per share in the final quarter of 2025. This is significantly higher than the 31 per share average of analyst forecasts and despite the airline posting a total net loss of $114 million, shares immediately rose in response.

US stocks immediately rose 8% on October 23 to close Friday markets up 7.9% at $13.78.

Investment research firm Zacks sent an investor note saying it expects both the Southwest and U.S. data to see growth in the final quarter and for the full year.

More about travel:

“The downside is likely to be partially offset by improving travel demand and lower fuel prices,” Zacks analysts wrote in a client note that also said they expect a 3.5% increase in U.S. operating expenses in recent quarters.

“Despite jet fuel costs declining year over year (down 1.6% in Q3 2025, according to our model), AAL expects to continue to experience increasing cost pressures due to its pilot labor agreements and deals,” the company further wrote in reference to the deal struck in 2023 with its pilots union.

Any forecasts for the final quarter must take into account the uncertainty surrounding the government shutdown. While air traffic controllers and TSA workers are both classified as essential workers whose jobs are safe despite the loss of funding, several airline executives expressed concern that a prolonged shutdown could lead to labor shortages as some choose not to come in without pay, and lower traveler numbers as consumer confidence falls.

Related: United Airlines returns to this California airport after 11 years

This story was originally reported by TheStreet on October 25, 2025, where it first appeared in the Investing section. Add TheStreet as a preferred source by clicking here.