Dallas-based Southwest Airlines hopes new initiatives it's rolling out over the next few years will boost revenue after the airline’s financial performance turned out lower than expected.
Those initiatives include rolling out better Wi-fi, assigned seating and new premium seating sections, which will reduce legroom for economy passengers. Southwest leaders highlighted the changes during an investors call Thursday.
"Up front, I want to acknowledge that recent financial performance is not up to your or to my expectations," Southwest CEO Robert Jordan told investors Thursday. "The plan we're implementing that we're positioned to navigate [challenges] and emerge even stronger."
The assigned seating was first announced in July the same day the company reported a drop in its second-quarter profits. It's a departure from the airline’s traditional open-seating model, but the company believes it will increase customer loyalty.
“Preferences were unequivocal,” said Ryan Green, vice president for commercial transformation for the airline. “Eighty percent of Southwest customers want assigned seating, as do 86% of other airlines customers, and looking at lapsed customers, the seating and boarding process is the number one reason they haven't returned to Southwest.”
Green told investors Thursday that customers will have more fare bundle options to choose from when the assigned seating rolls out.
The carrier is also adding new red-eye flight service from several cities in Hawaii to Las Vegas and Phoenix.
“Once we introduce red eyes, the connection opportunities will increase the addressable revenue for our Hawaii franchise and improve performance even further,” said Green.
Even as it introduces new flights, the airline is also cutting recently cut a third of flights to Hartsfield-Jackson Atlanta International Airport and reducing its gates at the airport from 18 to 11.
The changes are part of an effort for the airline to stave off calls by Elliot Investment Management for Jordan to resign, the AP reported. Elliot has a 10% economic stake in the company and has also been calling to overhaul the airlines board of directors.
"We've been affected by a lot of factors, some external, but many of those controllable as well," Jordan said Thursday. "I want to be clear that we own those challenges."
The new assigned seating model and red eye flights will roll out in 2026.
Pablo Arauz Peña is KERA’s growth and infrastructure reporter. Got a tip? Email Pablo at parauzpena@kera.org. You can follow him on X @pabloaarauz.
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