It’s a big day for Southwest Airlines. The airline has announced plans to introduce assigned and premium seating, and also intends to fly redeye flights as of early 2025. On top of that, Southwest has today reported its Q2 2024 financial results, which I wanted to take a look at.
Continue reading: Southwest Reports Lower Profits, But There’s Upside
Share your questions, experiences, and thoughts below.
Alaska is also a primarily domestic airline - a bit more south of the border -but had better margins
Are you going to talk about JetBlue's route cuts? Some of them are pretty big.
This is not looking good for them at all.
Ben, "Unlike American, Southwest does have “levels” to pull..." I think you mean "levers".
@Ben since you wrote about WN’s quarterly earnings and mentioned B6 & AS. It would be an interesting read to get your take on their results.
Herb probably rolling in his grave at a bunch of of egotistical activist investors who believe with their big egos that they know better in how to run SWA (even though they really don't). I honestly believe all these changes these activist investors keep pushing SWA to fo are going to blow up in their face in due time because it's not going to work and honestly be detrimental to boarding efficency and on time performance.
If you read the deck from Elliott Capital, there are only three words in the whole thing that matter: "Unlevered balance sheet." Elliott's objective is a typical private equity play, load Southwest up with debt and then use the money to do share buybacks, temporarily boosting the stock price. Elliott will move on, pocketing large gains, leaving a debt-hobbled Southwest to try to recover if it can.
This is just corporate strip mining. I'm astonished that it's legal, but then again, laws are for sale in the US and private equity is in a position to buy them.
The US airline industry is at a worse inflection point than it has been in decades.
AA leads a group of airlines that are barely profitable if not unprofitable on a year round basis including Spirit, JetBlue and Hawaiian
WN needed to change its business model but has changed multiple times before. They have a strong balance sheet and will be fine.
AS, DL and UA ALL have taken hits in one form or another but those 3 are the financial leaders of the industry.
Southwest doesn’t have business class, meals, tv screens, and has a limited network/fleet that can’t really get you too many places internationally.
When people pay for an upgrade they are mainly looking for a business class seat especially internationally. Just a little bit of leg room isn’t noteworthy imo that is essentially what Spirit is already offering.
They will probably have to merge with another airline long term.
Rarely ever fly them but with seat assignments I would absolutely
I wouldn’t likely look at Delta or United again for the short haul stuff again
More concerning is their buying too many Boeing Max planes and close call pilot catastrophes be it pilots the titanic max or both
Their seats are uncomfortable so long haul not likely.Seat width horrible and inadequate seat padding
Their pricing would still have to make sense
And best of all the loss of ghetto wheel chair abusers clogging the aisles.Hopefully off to Spirit and Frontier
Now folks who legitimately need wheelchairs can board with assistance dignity and less stress
This might be the most poorly-informed, non-Tim Dunn, post I've seen in years. WTF are you even talking about right now? I'm guessing you have absolutely no idea what kind of ship Southwest is running.
I said this on FT, but I truly want to see some "activist investor" be met with a point-blank statement from a company inviting them to find better returns elsewhere and/or meeting complaints about lousy returns with the level of sympathy usually reserved for those moving in next to an airbase complaining about the jet noise. Or perhaps how much sympathy I felt for residents complaining about a cricket club in the UK - said club having, I believe, been in that location since 1790. You moved in knowing what was there. Deal with it.
[To be fair, I think Disney did this. We'll see how all of that plays out in the long run, however.]
That is a very defeatist approach. Why are the shareholders paying the CEO & mgmt team millions of dollars if nothing can be done to improve returns? Maybe, they should hire Elmo & his friends as the mgmt team & the same returns will be produced. The activist is the owner of the business and thinks he can do better by picking different managers. Based on the track record of the current mgmt, he is highly likely to be right. Did you notice how WN went from pondering changes to announcing them...
While I agree that premium seating will grow the revenue I'm not sure it'll be as large as predicted. Those who currently want person seating already are buying early bird or business select add-ons, are there really that many more, who currently are happy with a B or C boarding group, who will pay more? Now the one thing that could happen is that seat assignments might pull business from other airlines. WN has a good product and things like open seating might be pushing travelers away.