Why Southwest stock is down while American Airlines is soaring

At the end of the day on Friday, Southwest Airlines ended the week starting on Oct. 20 with its shares down 4.79% at $32.20.

On Oct. 22, the Dallas-based airline published 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 after the announcement, Southwest stock fell by 7.5% as investors were not convinced by chief executive Bob Jordan’s message of how the airline’s decision to start charging passengers for checked bags and assigned seating has helped put it on a more profitable path.

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

Southwest stock saw a slight bump after the immediate news of the earnings passed but is still down significantly as the airline struggles with both the market pressures facing the rest of the industry and its efforts to keep customers who used to choose it over competitors for perks that it has now scrapped.

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

American stock spiked by 8% immediately on Oct. 23 and closed Friday markets up 7.9% at $13.78.

Investment research firm Zacks sent out an investor note saying that it expects both Southwest and American numbers to see growth in the final quarter and for the year in its entirety.

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“The downside is likely to have been partially offset by improving travel demand and lower fuel prices,” the Zacks analysts wrote in a client note which also states that it expects a 3.5% rise in American’s operating costs in the final quarters.

“Despite costs on aircraft fuel decreasing year over year (down 1.6% in third-quarter 2025, per our model), AAL expects to continue experiencing increased cost pressure from the labor agreements and deals inked with the pilots,” the firm wrote further in reference to the deal struck with its pilot union in 2023.

All predictions for the last quarter need to take into account uncertainty around the government shutdown. While air traffic controllers and TSA employees are both classified as essential workers whose jobs are safe despite the lapse in funding, several airline executives expressed concern that a prolonged shutdown could lead to both worker shortages as some choose to not come in without a paycheck and lower traveler numbers as consumer confidence dips.

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