Reimagines core product to meet evolving Customer preferences and increase revenue opportunities
Launches new commercial initiatives to enhance Customer Experience and drive value while preserving flexible policies like bags fly free1
Expects to deliver in 2027: approximately $4 billion2 in cumulative incremental earnings before interest and taxes (EBIT) contribution and after-tax return on invested capital (ROIC) of 15 percent or greater, well above weighted average cost of capital (WACC)
Board approves $2.5 billion share repurchase program
DALLAS, Sept. 26, 2024 /PRNewswire/ -- Southwest Airlines Co. (NYSE:LUV) ("Southwest®" or the "Company") today will host an Investor Day briefing in Dallas where Southwest Leaders will outline next steps in a comprehensive three-year plan that builds upon the Company's unique business model for an even better Southwest. The carrier is transforming its Customer Experience to provide more choices and greater comfort for Customers, designed to drive revenue growth and return the carrier to industry-leading profitability.
"We're now ushering in a new era at Southwest, moving swiftly and deliberately to transform the Company by elevating the Customer Experience, improving financial performance, and driving sustainable Shareholder value," said Bob Jordan, President, Chief Executive Officer, and Vice Chairman of the Board.
Key themes and new initiatives to be detailed at Investor Day include:
Transforming Our Product to Meet Customer Preferences
Southwest's transformation is guided by data-driven research of travelers' changing needs and expectations. Southwest's evolution will provide even more choices for its Customers and preserve aspects of the business that make the airline unique among its competitors:
Assigned Seating: Southwest will broaden its consumer appeal and boost demand through an assigned seating model. Airline passengers now have a clear preference for seat assignments: 80 percent of Southwest Customers and 86 percent of passengers who choose other airlines want assigned seats. Southwest flies farther than ever, and seat assignments are a higher priority on long-haul flights. The Company expects to begin selling assigned seats in the second half of 2025, with its first flights operating with the new model in the first half of 2026.
Premium Seating: Market research shows that the preference for an assigned seat with extra legroom offers broad appeal for both business and leisure travelers. Southwest will offer extra legroom options with up to five additional inches of pitch for approximately a third of its seats while maintaining a standard economy seat pitch among the best in the industry. New seating product options will drive demand and are expected to generate more revenue per passenger.
Southwest Boarding with Upgrades: Southwest will evolve its boarding process with seat assignments while focusing on operational efficiency and improving the Customer Experience. The updated boarding process will maintain Southwest's unique and popular approach in boarding through position numbers and signage displayed on stanchions within the gate area. The carrier's most loyal Customers and those who purchase premium seating will continue to be among the first to board.
Bags Continue to Fly Free: Extensive research reinforces Southwest's bags fly free® policy1 remains the most important feature by far in setting Southwest apart from other airlines. Based on Southwest's research, the Company believes that any change in the current policy that provides every Customer two free checked bags1 would drive down demand and far outweigh any revenue gains created by imposing and collecting bag fees.
"We've spent the past few years laying a foundation that serves as the base of our transformation," said Ryan Green, Executive Vice President Commercial Transformation. "We've already started rolling out modernized cabins with improved WiFi, in-seat power, larger overhead bins, enhanced operational efficiencies, and optimized flight schedules. We will continue to build upon our unique competitive advantages, while adapting to consumer priorities in today's dynamic environment."
New Offerings to Broaden Appeal and Strengthen Revenue
In addition to offering more Customer choice, Southwest will launch new capabilities and products designed to add value and revenue potential:
Global Airline Partnerships: Southwest is formalizing partnerships with international carriers to expand its network and connect Customers with more global destinations to generate additional demand for travel across the Southwest network. Icelandair will become Southwest's initial partner with an expected launch in 2025 through Baltimore-Washington International Airport, which will serve as its first U.S. gateway for the carriers. The Icelandair partnership will expand gateways throughout 2025, and Southwest intends to add at least one additional partner carrier next year.
Getaways by Southwest™: In 2025, the Company intends to launch a new product, Getaways by Southwest, offering vacation packages ...
