MW Here's how Southwest is trying to stay one step ahead of weaker travel demand

By Claudia Assis

Airline pulls guidance for this year and the next, will reduce capacity

Southwest Airlines Co. late Wednesday pulled its guidance for this year and the next, and said it will cut capacity starting in the second half of the year as it faces lower travel demand.

Southwest $(LUV)$ said in a filing that it was difficult to forecast booking trends amid "the current macroeconomic uncertainty," and as such it was not reiterating its 2025 or 2026 outlooks for earnings before interest and taxes. The stock fell more than 3% in the extended session, reversing 3% gains in the regular trading day.

Worries about consumer spending and lower air-travel demand led Delta Air Lines Inc. $(DAL)$ to pull its guidance earlier this month.

Southwest also said it was "proactively" reducing capacity in the second half of 2025 to "accommodate a lower demand environment" and save costs.

Southwest is focusing on "controlling what we can control," Chief Executive Bob Jordan said.

Flight schedules are not final, but Southwest expects 2025 capacity will be up about 1% year over year, which would be on the low end of a previous expectation of up between 1% and 2%.

It will achieve that "modest" growth entirely by increasing the utilization rate of its fleet with its new red-eye flights.

The airline also called for second-quarter revenue per seat mile, a key measure of profitability in the airline industry, of flat to down 4%.

The company is in the middle of changing the way it does business, which has attracted criticism from its loyal customer base.

Southwest announced last year it was ending its hallmark open-seating policy and will start offering assigned seats and premium seating, among other unpopular changes.

Southwest reiterated that it introduce basic economy and bag fees for most fare products starting next month, and that it remained on track to begin selling assigned and extra-legroom seats later this year.

-Claudia Assis

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 23, 2025 17:24 ET (21:24 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.