Southwest Airlines Slashes Flight Schedule and Suspends Outlook, Citing Economic
Travellers wait in line at the Southwest Airlines ticketing counter at Nashville International Airport after the airline cancelled thousands of flights in Nashville, Tennessee, on December 27, 2022.

Southwest Airlines announced on Wednesday that it will cut flight capacity in the second half of 2025 and has paused its financial outlook for the next two years.

The move comes as signs grow of slowing domestic travel demand and broader economic uncertainty.

The airline said it expects revenue per seat to stay the same or drop by as much as 4% in the second quarter compared to last year.

According to NY Post, because of this and unpredictable booking trends, Southwest has decided not to reaffirm its 2025 and 2026 profit forecasts.

"Amid the current macroeconomic uncertainty, it is difficult to forecast given recent and short-lived booking trends," the company said in a filing.

Other airlines are also taking similar steps. United, Delta, and Alaska Airlines have recently pulled back their forecasts as well. United even gave two different predictions, saying the US economy is "impossible" to predict.

Budget Travelers Pull Back, Pressuring Southwest's Profits

Southwest mostly flies within the US and relies on budget-conscious travelers. These customers are now pulling back on spending, making the airline more vulnerable than others with international and business travel routes.

To protect its profits, Southwest will reduce the number of seats it offers in the second half of the year. The airline said bookings weakened during the first quarter, especially for domestic leisure travel.

In the first quarter, Southwest reported a loss of $149 million. That's better than its $231 million loss a year ago. The airline brought in $6.43 billion in revenue, slightly more than Wall Street expected, CNBC said.

Despite financial pressure, Southwest says new efforts are helping. "We are seeing positive results on recently rolled out initiatives," said CEO Bob Jordan.

These include listing fares on third-party sites like Expedia, creating a basic economy ticket, and planning to charge for checked bags—something it hasn't done in over 50 years.

Next, Southwest will roll out assigned seating and extra legroom options by fall. The airline has said it hasn't seen signs that customers are leaving because of the new fees or changes.

Still, with travel demand uncertain, Southwest is focusing on cost control. The airline will talk more about its plans and financial results during a call with analysts on Thursday afternoon.

Originally published on vcpost.com