Southwest Airlines exceeds profit expectations and anticipates increased revenue in the fourth quarter.

• The airline exceeded analysts' expectations with its sales and profits, and forecasted higher revenue to end the year.
• Elliott, an activist investor, has been pushing for leadership changes at the airline, but the carrier's leaders have been resisting.

While the third-quarter profit of the carrier fell from the previous year, it surpassed Wall Street estimates. The company's workers worked hard to increase revenue and prevent activist investor Elliott Investment Management from taking control.

The Dallas-based airline predicted a 3.5% to 5.5% increase in unit revenue for the fourth quarter, despite a 4% decrease in capacity from the previous year. Additionally, the airline anticipates that costs, excluding fuel, may increase by as much as 13%.

Shares of the company rose more than 3% in premarket trading Thursday.

According to Southwest's earnings release, travel demand in the quarter has been healthy and bookings for the holiday season are strong, indicating the resilience of the leisure travel market.

Airlines are cutting back on unprofitable capacity in anticipation of strong travel demand to end 2024, as other carriers have indicated.

Southwest announced a three-year plan to increase earnings before interest and taxes by $4 billion by 2027, while also authorizing a $2.5 billion buyback and cutting underperforming flights from Atlanta to reduce costs.

Southwest announced on Thursday that it will accelerate its buyback plan by repurchasing $250 million of its own stock.

The airline is introducing a new seating arrangement where passengers will have to pay for seats and also have the option to purchase extra legroom at a higher cost, marking the biggest changes in its more than 50 years of operation.

According to consensus estimates from LSEG, how Southwest performed in the third quarter compared with Wall Street expectations.

• Earnings per share: 15 cents adjusted vs. an expected zero cents
• Revenue: $6.87 billion vs. $6.74 billion expected

The company reported a 5% increase in third quarter revenue, which was $6.87 billion, compared to the year-earlier quarter. However, net income fell 65% to $67 million, or 11 cents a share, though that was ahead of estimates. On an adjusted basis, the company reported $89 million in net income or 15 cents a share, which was below analysts' forecasts to break even.

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