Southwest Airlines (NYSE:LUV) and American Airlines (NASDAQ:AAL) are due to report their third-quarter financial results on October 23.
The consensus EPS estimate for LUV is -$0.04, while that for AAL is -$0.28. Turning to the companies’ top line, Southwest is projected to report a revenue of $6.93 billion, while American Airlines’ revenue is expected to come in at $13.63 billion.
Even as analysts expect both airlines to report a loss this quarter, research showed that investors are bullish on the companies.
An analysis conducted by Wolfe Research showed that LUV was the third most preferred stock among “long ideas”. 19% of the investors they interviewed voted LUV as their third favorite airline stock. Meanwhile, both companies topped Wolfe’s list of “short ideas”.
“32% of investors cited LUV as their favorite short idea right now, followed by 29% for AAL,” analyst Scott Group said.
Investors view Southwest as well-positioned for the fourth quarter, with Wolfe noting that expectations for its guidance are among the highest compared with consensus.
Speaking about the overall sector, Evercore said that the recent weakness in the airline industry represented an attractive entry point into 4Q2.
“We continue to see a constructive setup for Airlines into 2026. Airline demand was significantly impacted starting in late February and into March on tariff uncertainty. While leisure demand was impacted, corporate activity also paused and has since recovered,” it noted.
Over the last 2 years, LUV has beaten EPS estimates 63% of the time and revenue estimates 50% of the time. Meanwhile, AAL has beaten EPS estimates 88% of the time and revenue estimates 75% of the time.