Southwest’s earnings are so unhealthy it’s leaving 4 airports—and contemplating scrapping its open-seating plan

Southwest CEO Bob Jordan stated within the firm’s first-quarter earnings call Thursday that in August it could cease service at airports in Cozumel, Mexico; Bellingham, Wash.; Syracuse, N.Y.; and Houston, Tex. It additionally stated it could scale back flights at main hubs resembling Hartsfield-Jackson Atlanta Worldwide Airport and Chicago O’Hare Worldwide Airport. 

“While it’s never our desire to exit a city or shrink service to a market, we are committed to our financial performance goals, and network and capacity actions will continue as a lever to improve overall financial performance,” Jordan stated on the decision. 

Southwest shares closed down 7% on Thursday after the provider reported a $231 million loss, deepening from a $159 million loss throughout the identical interval a yr prior. The inventory dipped one other 0.8% on Friday to finish at $27.03.

The provider additionally stated its formidable development plans had been on maintain because of Boeing’s delivery delays and now expects to obtain 20 planes this yr, as an alternative of the 46 it anticipated in March. 

Along with retreating from some airports, Southwest stated it has frozen hiring, apart from just a few necessary positions, and would provide a few of its staff unpaid go away later this yr to chop again on prices. The provider stated it expects its workforce to shrink by about 2,000 staff by the top of the yr when in comparison with 2023.

Not solely is the corporate reducing prices, it is usually exploring new income streams, even when meaning altering a few of its long-held practices. This contains re-evaluating its open-seating plan, the place clients can choose whichever seats they like as they board.

The provider’s opponents have steadily moved to broaden tiered seating past simply coach and firstclass, leading to main income inflows. Southwest hasn’t benefited from this pattern due to its dedication to having a single cabin.

However the firm is now assessing whether or not to make adjustments to raised accommodate its clients’ preferences with out straying from its model beliefs, stated Jordan.

“[E]arly indications, both for our customers and for Southwest, look pretty darn interesting. So I’ll just leave it there and more to follow,” he stated.

Nonetheless, some issues, like a curtain between firstclass and coach, wouldn’t really feel proper, added Southwest Chief Business Officer Ryan Inexperienced. Bag fees, that are frequent on different airways, aren’t on the desk both.

“We will stay true no matter what we do to the brand and who we are and how we approach customers,” Inexperienced stated.