Southwest Airlines doesn’t know who they are any longer, and doesn’t know what their core business is. They’re ‘just like the rest of the airlines, but not as good’ now that they charge for checked bags and seat assignments and expire their flight credits – but they have the worst inflight wifi, no standard power outlets, no seat back entertainment screens, and no ovens in their galleys to offer meals. There’s no first class, no lounges, and they’ve even taken an axe to the company’s famous culture through layoffs.
They said checked bag fees would generate $1.5 billion in revenue but cost them $1.8 billion in business. It turns out to be worse than that – in July they touted they’d achieve just $1 billion in revenue even as once-loyal customers abandon them.
So they’re flailing – they executives revamped the business model to save their jobs as Elliott Management took effective control of the board. And CEO in name only Bob Jordan says they’re now considering new planes, first class and lounges.
- Southwest is chasing whatever customers say they want whether it’s iPhones, donuts or European destinations.
We are going to continue to pursue the customer and provide the things that they want. We’ve got … millions of folks that love Southwest Airlines. They would love to fly us to Europe, as an example. 
- That could mean new planes, premium cabins, and airport lounges.
Southwest Airlines doesn’t have lounges… We don’t serve destinations beyond what the 737 [can] serve. We don’t have a true premium product… A first class. A business class.
- And the all Boeing 737 operator could go with Airbus A321XLRs for Europe, because those are cheaper to operate than widebodies and can fly further than the carrier’s 737 MAXs (that could operate to places like Iceland and Ireland).
Should we chose to fly to Europe… that’s not a mission the 737 Max will do, so we need a different aircraft…It could be that a widebody is just too much, at least for a start.
- But Jordan doesn’t actually know, because they’re quickly trying to figure out a future for an airline that’s become rudderless.
I’m not promising those things… Everything is on the table at Southwest.
Southwest now partners with Icelandair, China Airlines, and Eva Air. That’s a start, and something they should have done years ago – sell tickets to customers of airlines bringing passengers to the United States, and sell travel beyond their own destinations to their customers.
There’s a lot of change that’s been needed at Southwest. They probably maxed out their business model of one plane type, which limited them to flying to large-ish destinations close to the United States. They don’t have feed from smaller cities with regional partners or small planes (for markets that can’t support 737s) or to long haul destinations too far to reach with a 737. And they haven’t had the products people want to buy – they’re adding extra legroom seats but still won’t let you pay to block a middle seat. And they became top-heavy and underinvested in IT (hence their famous Christmas 2022 meltdown).
The problem is that this implies there’s no real opportunity to return to the kind of growth the airline saw in the past, and the kind of valuation multiples for their stock. There’s no great answer for Southwest, but their approach – to copy the business models of financial laggards JetBlue and American – isn’t promising.
Wishing them all the best with that… @Mike Hunt has been hoping for an actual SWA First Class; sounds nice to me. However, I doubt activist investor Elliott (mis)Management is going to want to fund all these improvements; rather, I expect little of this will come about, other than the hype. And, as @Tim Dunn and I have been talking, whenever it falls through, Delta’s read to swoop in, and acquire some assets!
How long before the executives start taking those golden parachutes?
This is turning into an HBR case study on what NOT to do.
Unfortunately, my Southwest long dated puts are still under water. Go figure.
Gary, are you sure Doug Parker (US Air) is the worst CEO? I think Bob Jorden (aka Elliot Management) and Jeff Smisek (Continental) are pretty close competition for the worst.
>Southwest is chasing whatever customers say they want
I want my Southwest Classic back.
Southworst has screwed themselves and their loyal customer base.
@Other Just Saying – I say it’s Doug Parker based on destruction of shareholder value. Elliott Management has not driven gains with their plan, but we can’t say they’ve evaporated tens of billions in equity. And Jeff Smisek, sure their billions in expense cuts were dubbed “Project Quality” in a particularly Orwellian manner and he resigned in disgrace in a corruption scandal, but he advanced “changes you’re going to like” so who can really fault him?
@hood – several top executives, like Ryan Green, Tammy Green, and Jonathan Clarkson have already left – frankly it’s what they *should* do (and what Jordan should have done, as well).
@Gary said:
“Southwest now partners with Icelandair, China Airlines, and Eva Air.”
Not going to help them. When I fly CI or BR, I’d never choose WN for my positioning flights now; it’s not that hard to book separate tickets on somebody else for those trips.
Once the changes went live, I cancelled my Southwest credit card and no longer pay any attention to WN.
WN said this morning that its baggage fees should deliver $350 million in additional revenues in 2025, far less than they originally forecast.
the next 2 quarters have to validate whether what WN is trying to change right now is working or there has to be a recognition that the plans were wrong.
WN has tried to chase a lot new in a short period of time; organizations and their customers can only move so fast, esp. given that the entire industry is still very competitive.
DL said this morning that it sees strong demand through the end of the year which means there is more “forgiveness” in poor business plans that there was earlier this year.
@Tim Dunn — I know it’s anecdotal, but I’m only booked through Q1 2025, then… nothing. Usually I’d have plans 10-12 months out; I’m scaling back. Wonder how widespread this may be. Tariffs. Wars. Troubles. Don’t worry, though, I’ll still use my DL Companion Certificates once I receive them. *wink*
@Gary: Ok Ok. I totally agree that Parker was really….really bad. I remember, he did an interview on CNBC Mad Money show some time ago. Most CEOs at least sound intelligent. Doug Parker sounded like a total dunce.
As much as I have always liked and respected Bob Jordan, having worked with him a couple of times briefly, I am thinking it is time for him to move on. My fear however, is that the Predator in Charge will further destroy what Herb Kelleher built. Frankly, Southwest needs to back peddle a bit and remember what made them great to begin with. That was the respect for all passengers, not just the entitled who Gary Kelly worshiped. They also need to re-evaluate their boarding process as it has become a disaster and has greatly encouraged the dishonest scammer population. When the call for pre-board says that if you can walk down the Jet Bridge, please line up now. If you cannot and are in a wheelchair we will take you down shortly. And then 20 people line up for pre-board, leaving those who are truly disabled and cannot walk down to sit there and wait, taking a longer time once on the aircraft as walking 6 or 8 rows back can be a real hardship for some. And the scammers sit there grinning at their accomplishment.
Southwest Customers all used to feel valued and appreciated, whatever their fare. These days, when I travel, it seems nobody feels valued. But, in truth, isn’t that the plan of the Predator?
Next to be chopped/diminished is the CP.
Good luck after that.
WN has the same issue as JetBlue. Not a legacy airline and not an ULCC but trying to find a niche. But the cost of becoming a legacy carrier, opening lounges and remodeling planes, and expanding particularly International isn’t cheap. And if the bet doesn’t pay off an accompanying bankruptcy filing.
We’re getting to the point where Southwest would be better served winding down operations in an orderly fashion, selling off the assets and paying out the shareholders.
I used to book Southwest flights 7 months out. Funds expiration has me booking 2 months max for cash tickets. I book only points tickets farther out.
Funds expiration was the biggest mistake of all the changes.
Gary Leff points out that Southwest Airlines is eager to cater to every whim of its customers, whether they’re asking for iPhones, donuts, or flights to European destinations. So, to Southwest Airlines CEO Bob Jordan, thank you for reaching out. What I truly desire is a puppy and world peace!
@Gary: I have more personal animus against Jeff Smisek. I was Presidential Platinum and loved flying Continental because they did not get rid of perks like free food and so forth. Their flight attendants were friendly. They had a nice amenity bag in international business. Their breakfast burritos in coach were tasty. The whole cashews in business were quite good. Then, he got rid of all the perks, while bragging about his cost cutting in interviews and presentations. Then he merged Continental into United with him as a CEO, because he wanted to be a big cheese. So emotionally, I dislike Smisek the most, despite the fact other airline CEOs are probably worse. Yea, my viewpoint is not fully rationale.
But, but, but, I got a fancy brochure in the mail this week from Chase saying that if I spend SEVENTY-FIVE THOUSAND DOLLARS on the CSR I can get A-list status with WN and… wait for it… a $500 credit with WN when booked through Chase Travel! Plus the brochure told me to Embrace the Extraordinary! Are you saying that, gasp, that may not be a premium offering? The brochure was so fancy though – printed on heavy paper with gold-pressed lettering… is it all an illusion? What is real? What, even, is life?
Im surprised that Bob Jordan is still CEO. I expect Uncle Bobby to ” Retire ” early 2026.
I don’t quite understand why LUV’s share price has stayed above $30 since May. Granted, nothing like where it was at 5-10 years ago, but I sold off my mom’s (small) stake back in May, thinking it was time to bail.
Like others, I now only book SWA with points. And despite all of the shortcomings Gary outlines, I generally find the prices to be up sharply from a couple of months ago and the lowest fare type is usually “sold out”. And to add insult to injury I get almost weekly “fare sales”, that guide me to these inflated fares.
These guys are headed for disaster.
There is zero chance I renew my business card.
Chris Johnson the head of Ground Operations for Southwest is retiring and from what my wife says who still works for Southwest thinks it wasn’t by choice. TWU555 President and Secretary both suspended.
@Disco Dave. Yea, I am thinking about buying more long dated puts. I do not understand why the the stock is $31.45/share as of now (9/11/25).
They don’t need new planes. They need a new board of directors and new management.
I’m one of the long time customers who only flew Southwest – driving two and half hours out of the way to do so.
SWA used to be a lower cost airline. No more. They used to fly into smaller, underused airports which reduced bout costs and delays. No more. They had open seating and every seat cost the same – no more. Checked bags were included in the price of a ticket. No more.Flight credits never expired. No more.
Now, I don’t have a Harvard MBA, but I always thought the key to a business’s success was to be different than its competition, not to be like everyone else.
So, with Southwest in the middle of average, becoming just like every other carrier, I had to ask myself why I should drive two and a half hours out of the way to get what I can get fifteen minutes away. I could not come up with a single reason. So, in April of this year, I booked the three flights I knew I would take this year, all using Rapid Rewards points. Future travel will be based on price, schedule and how far the airport is from me.
Well, SWA, it was good while it lasted.
I wonder if Alaska wants to buy another airline? JetBlue’s route structure would fit perfectly with Alaska’s but Southwest’s planes all match Alaska’s, which can be a mixed blessing.
It is SO HARD to watch Southwest fail. Who would ever have thought? I’m hoping that junior employees know to seriously put their financial health in order & start looking elsewhere. Those of us who have admired SWA over the years are simply in disbelief. Really, really sad.
@Peter — I used to spend at least $75K/year on travel expenses earning 3x on the CSR, yet, soon that’s basically being reduced to 1x, since much of it was never on their portal. Ugh.
Play stupid games, win stupid prizes. Sad.
I’ve pulled out from WN completely at this point, only even checking pricing if they have a direct flight that others don’t. But even that seems to have fallen by the wayside, a same week (urgent personal business) ticket BWI-FLL was 650 on AA with one stop and 900 on WN direct last month. That’s insane, no thanks. I have a personal trip coming up to the northeast, but I might just take a train over this nonsense.
I just flew southwest on a direct flight that no other airline offers a direct routing on and the plane was only about 60% full. Used up some of my credits I have. I have quite a few points and about $600 in vouchers remaining but will likely never use them because I have status with United and American so get bags free with United, American, and Alaska. Primarily used them intra California on trips when visiting multiple friends since they offered direct routings and the price was comparable with 2 bags to United and American if not slightly more. Absolutely no reason to consider Southwest going forward. Seems like a lot of other people are making the same calculations.
Just another company that is spinning around the drain. Who is this CEO talking about that Southwest First Class would be appealing.
This company spent decades they were a nice low cost airline with zero frills to get you back and forth. It worked well millions upon millions used them. So now you have a brand that is saturated with the ideology that it is just that. This would be like trying to turn Walmart into Saks Fifth Avenue. It isn’t ever going to happen. They don’t even have plugs on their planes.
Expect them to try much and all to fail. Next year will be crippling with 2027 being emergency freak out mode for Southwest.
@1990 – agree 100%. I think Citi Strata Premier may be a good fit though – their 3x travel bonus: “Includes purchases at airlines, hotels (not booked through the Citi Travel site via cititravel.com), and travel agencies.” Pretty broad and should include other portals like Agoda, etc. as well. And can get a Strata Regular flavor and get 3x on select transit: “Select transit includes car rentals, ferries, commuter railways, subways, taxis/limousines/car services, passenger railways, bridge and road tolls, parking lots/garages, bus lines, and motor home and recreational vehicle rentals.” Also broad. Together it basically replaces the CSR 3x travel category.
I’ve put $75k on the CSR from time to time, but with the points categories changing, much more likely that come November i’ll be moving more of my spend to Citi. But there’s absolutely no incentive to spend $75k just to get benefits with WN. Literally the opposite of an incentive. I guess Diamond v. Platinum with IHG could be valuable for some.
@BA — Who? @Mike Hunt, that’s who. (Where’ve you been, buddy??)