Southwest Airlines Faces ‘Difficult Decisions’ Amid Profitability Push

Southwest Airlines has warned its employees of “difficult decisions” ahead as the company strives to boost profits under pressure from activist investor Elliott Investment Management, which is calling for leadership changes.

In a recent video message to staff, COO Andrew Watterson acknowledged that while Southwest has already implemented significant changes, more steps are needed to return to profitability. Over the summer, the airline announced plans to introduce assigned seating, red-eye flights, and premium seats with extra legroom—departures from its long-standing open seating model aimed at increasing revenue.

Southwest has also made efforts to modernize its marketing strategy, targeting younger consumers through new ad campaigns and listing its flights on platforms like Google Flights and Kayak. However, Watterson admitted that further adjustments to the airline’s network are necessary to achieve financial goals. He emphasized that these changes would not involve station closures or furloughs but may affect the carrier’s footprint in certain cities, with possible staff transfers to other locations.

The airline is not alone in making such moves; competitors like JetBlue have similarly reduced routes to focus on more profitable flights.

Southwest is set to outline its upcoming initiatives and route adjustments during an investor day at its Dallas headquarters. Elliott Investment Management has been pushing for a leadership overhaul, criticizing current management for not doing enough to improve the airline’s financial performance. Executive chairman and former CEO Gary Kelly has already announced plans to step down after next year’s shareholder meeting.

Sources: AirGuide Business airguide.info, bing.com, cnbc.com