April 3 (Reuters) - Fitch Ratings on Thursday downgraded Southwest Airlines LUV.N to a "negative" outlook from its earlier "stable" rating, citing the carrier's possible shift to a less conservative capital allocation and financial policy.
The credit rating agency adds that Southwest's lack of progress towards margin improvement and higher capital deployment may drive a negative rating action.
Last month, Southwest Airlines announced its plans to start charging some customers for checked bags, marking a departure from its passenger-friendly policies, which Fitch believes could risk eroding its competitive strength relative to its peers.
Fitch said it affirmed Southwest's long-term Issuer Default Rating, which is its outlook on the airlines' ability to meet its financial obligations, at "BBB+".
(Reporting by Aatreyee Dasgupta in Bengaluru; Editing by Alan Barona)
((Aatreyee.Dasgupta@thomsonreuters.com))
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