The No. 4 airline by passenger traffic said it expects unit revenue to be down 3-4 percent for the quarter, compared with its December forecast of a decline of 4-5 percent.
Unit revenue reflects sales measured against how many seats an airline flies and how far it flies them.
Last week, larger rival Delta Air Lines Inc had also lowered its expectations of a decline in fourth-quarter passenger unit revenue, citing strong demand in December.
A computer outage in July had forced Southwest to cancel more than 2,000 flights and offer refunds to passengers. This was partly responsible for pushing down the airline's unit revenue by 4.1 percent in the third-quarter ended Sept. 30.