- Decides to assign seats and offer premium seating options to
meet evolving Customer preferences and increase revenue
opportunities
- Introduces redeye flights for sale to further optimize the
network and increase aircraft utilization
- Dedicates Southwest Officer Ryan
Green to lead new efforts as Executive Vice President
Commercial Transformation
DALLAS, July 25,
2024 /PRNewswire/ -- As the next step in a continuing
strategic transformation, Southwest Airlines Co. (NYSE:
LUV) (the "Company") is announcing several new initiatives designed
to elevate the Customer experience, improve financial performance,
and drive Shareholder value. As part of its ongoing focus on
product evolution, the airline is moving forward with plans to
assign seats, offer premium seating options, redesign the boarding
model, and introduce redeye flying.
Southwest continually reviews Customer expectations. During its
quarterly financial results in April, the airline shared that it
was studying product preferences and expectations, including
onboard seating. In addition to meeting Customer demand, the new
amenities are expected to produce additional revenue and strengthen
financial performance. Southwest will provide more details on its
comprehensive plan to deliver transformational commercial
initiatives, improved operational efficiency and capital allocation
discipline during its Investor Day in late September.
Assigned and Premium Seating
After listening carefully to Customers and conducting extensive
research, Southwest decided it will assign seats and offer premium
seating options on all flights. The airline has been known for its
unique open seating model for more than 50 years, but preferences
have evolved with more Customers taking longer flights where a seat
assignment is preferred. Additionally, Southwest conducted robust
operational testing that included live and over 8 million
simulation-based boarding trials. The airline is confident that
these Customer enhancements will meet expectations and not
compromise the airline's operational efficiency.
The research is clear and indicates that 80% of Southwest
Customers, and 86% of potential Customers, prefer an assigned seat.
When a Customer elects to stop flying with Southwest and chooses a
competitor, open seating is cited as the number one reason for the
change. By moving to an assigned seating model, Southwest expects
to broaden its appeal and attract more flying from its current and
future Customers.
In addition to assigning seats, Southwest will offer a premium,
extended legroom portion of the cabin that research shows many
Customers strongly prefer. While specific cabin layout details are
still in design, Southwest expects roughly one-third of seats
across the fleet to offer extended legroom, in line with that
offered by industry peers on narrowbody aircraft.
The decision to update the seating and boarding model is part of
Southwest's ongoing modernization efforts. During the past two
years, Southwest has enhanced its onboard offerings with
improvements such as faster WiFi, in-seat power, and larger
overhead bins. Work is well underway on a refreshed cabin design,
including new, more comfortable RECARO seats. The addition of
assigned and premium seating will give Customers more choice and is
expected to further enhance the all-in value Southwest Airlines is
known for.
"Moving to assigned seating and offering premium legroom options
will be a transformational change that cuts across almost all
aspects of the Company," said Bob
Jordan, President, CEO, & Vice Chairman of the Board.
"Although our unique open seating model has been a part of
Southwest Airlines since our inception, our thoughtful and
extensive research makes it clear this is the right choice—at the
right time—for our Customers, our People, and our Shareholders. We
are excited to incorporate Customer and Employee feedback to design
a unique experience that only Southwest can deliver. We have been
building purposefully to this change as part of a comprehensive
upgrade to the Southwest experience as we focus on Customer
expectations – and it will unlock new sources of revenue consistent
with our laser focus on delivering improved financial
performance."
Redeye Flights Now for Sale
Southwest also announced it is adding 24-hour operation
capabilities with the introduction of overnight, redeye flights.
Booking on initial routes is available today through
Southwest.com, with the first overnight flights landing on
Valentine's Day 2025 in five initial nonstop markets: Las Vegas to Baltimore and Orlando; Los
Angeles to Baltimore and
Nashville; and Phoenix to Baltimore. Southwest plans to phase in
additional redeye flying in the carrier's coming schedules as part
of its multi-year transformation to a 24-hour operation. Redeye
flying, coupled with continued reductions in turn-time through new
technologies and procedures, is expected to provide incremental
revenue and cost savings, enabling Southwest to fund nearly all new
capacity over the next three years without incremental aircraft
capital deployment.
New EVP Commercial Transformation
Given the significance of the changes, Ryan Green, previously Executive Vice President,
& Chief Commercial Officer, will take on the new role of
Executive Vice President Commercial Transformation, leading
development and rollout of these and other commercial initiatives
already underway. Green has deep knowledge of Customer trends and
currently leads the work on cabin transformation. He previously
directed efforts to transform Southwest Airlines' Rapid
Rewards® loyalty program and the digital Customer
experience. He reports to President, CEO, & Vice Chairman of
the Board Bob Jordan in this new role.
"I'm eager to lead this next step in our transformation to serve
our Customers with an even better Southwest. In addition to meeting
the evolving needs of Customers and fostering more loyalty, these
changes are expected to generate additional revenue as we
capitalize on greater demand for Southwest Airlines and offer
Customers the ability to purchase premium seating options," Green
said. "Together, these strategic initiatives play an integral role
in the airline's comprehensive strategy to meet Customer needs and
enhance Shareholder value, while maintaining the unique Culture,
Hospitality, and flexibility that make Southwest –
Southwest."
The Company will share further details about product designs,
cabin layout, timing, and incremental financial value at its
Investor Day in late September. The move to assigned and premium
seating will be significant. In addition to incorporating new
technologies and procedures for a seamless transition, the new
cabin layout will require approvals from the Federal Aviation
Administration. Southwest expects to make bookings available in
2025.
Gary Kelly, Executive Chairman of
the Board, said, "The Board fully supports these efforts to usher
in a new era for Southwest Airlines, and we have the ultimate
confidence in Bob and our Leadership Team to design and deliver an
experience that is unique and true to our Southwest Legacy."
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Specific forward-looking statements include,
without limitation, statements related to (i) the Company's plans
and expectations with respect to its initiatives, strategic
priorities and focus areas, goals, and opportunities, including
with respect to enhancing the Customer experience and Customer
value, improving financial performance and operating efficiency,
driving shareholder value, and new and increased revenue
opportunities; (ii) the Company's plans and expectations with
respect to assigned and premium seating, including expected
benefits, Customer demand, timing of implementation and
bookings, cabin layout, and expectations that intended
benefits will be achieved without compromising operational
resiliency; (iii) the Company's network plans and expectations,
including its plans and expectations with respect to redeye flying
and 24-hour operation capabilities; (iv) the Company's fleet plans
and expectations, including with respect to aircraft utilization
and its plans to increase operating efficiency; (v) the Company's
plans and expectations with respect to the redesigned boarding
model; (vi) the Company's plans and expectations with respect to
its refreshed cabin design and new RECARO seats; and (vii) the
Company's plans and expectations with respect to aircraft turn-time
and capacity. These forward-looking statements are based on the
Company's current estimates, intentions, beliefs, expectations,
goals, strategies, and projections for the future and are not
guarantees of future performance. Forward-looking statements
involve risks, uncertainties, assumptions, and other factors that
are difficult to predict and that could cause actual results to
vary materially from those expressed in or indicated by them.
Factors include, among others, (i) the impact of fears or actual
outbreaks of diseases, extreme or severe weather and natural
disasters, actions of competitors (including, without limitation,
pricing, scheduling, capacity, and network decisions, and
consolidation and alliance activities), consumer perception,
economic conditions, banking conditions, fears or actual acts of
terrorism or war, sociodemographic trends, and other factors beyond
the Company's control, on consumer behavior and the Company's
results of operations and business decisions, plans, strategies,
and results; (ii) the Company's ability to timely and effectively
implement, transition, operate, and maintain the necessary
information technology systems and infrastructure to support its
operations and initiatives, including with respect to revenue
management; (iii) the cost and effects of the actions of activist
shareholders; (iv) the Company's ability to obtain and maintain
adequate infrastructure and equipment to support its operations and
initiatives; (v) the impact of fuel price changes, fuel price
volatility, volatility of commodities used by the Company for
hedging jet fuel, and any changes to the Company's fuel hedging
strategies and positions, on the Company's business plans and
results of operations; (vi) the Company's dependence on The Boeing
Company ("Boeing") and Boeing suppliers with respect to the
Company's aircraft deliveries, Boeing MAX 7 aircraft
certifications, fleet and capacity plans, operations, maintenance,
strategies, and goals; (vii) the Company's dependence on the
Federal Aviation Administration with respect to safety approvals
for the new cabin layout and the certification of the Boeing MAX 7
aircraft; (viii) the Company's dependence on other third parties,
in particular with respect to its technology plans, its plans and
expectations related to revenue management, operational
reliability, fuel supply, maintenance, Global Distribution Systems,
and the impact on the Company's operations and results of
operations of any third party delays or non-performance; (ix) the
Company's ability to timely and effectively prioritize its
initiatives and focus areas and related expenditures; (x) the
impact of labor matters on the Company's business decisions, plans,
strategies, and results; (xi) the impact of governmental
regulations and other governmental actions on the Company's
business plans, results, and operations; (xii) the Company's
dependence on its workforce, including its ability to employ and
retain sufficient numbers of qualified Employees with appropriate
skills and expertise to effectively and efficiently maintain its
operations and execute the Company's plans, strategies, and
initiatives; (xiii) the emergence of additional costs or effects
associated with the cancelled flights in December 2022, including litigation, government
investigation and actions, and internal actions; and (xiv) other
factors, as described in the Company's filings with the Securities
and Exchange Commission, including the detailed factors discussed
under the heading "Risk Factors" in the Company's Annual Report on
Form 10-K for the fiscal year ended December
31, 2023.
About Southwest Airlines Co.
Southwest Airlines Co. operates one of the world's
most admired and awarded airlines, offering its one-of-a-kind value
and Hospitality at 121 airports1 across 11
countries. Southwest took flight in 1971 to democratize the sky
through friendly, reliable, and low-cost air travel and now carries
more air travelers flying nonstop within the United States than any other
airline2. Based in Dallas and famous for an Employee-first
corporate Culture, Southwest maintains an unprecedented record of
no involuntary furloughs or layoffs in its history. By empowering
its more than 74,0003 People to deliver
unparalleled Hospitality, the maverick airline cherishes a
passionate loyalty among more than 137 million Customers carried in
2023. That formula for success has brought industry-leading
prosperity and 47 consecutive years4 of
profitability for Southwest Shareholders (NYSE: LUV).
Southwest leverages a unique legacy and mission to serve
communities around the world including harnessing the power of its
People and Purpose to put communities at the Heart of its success.
Learn more by visiting Southwest.com/citizenship. As the
airline with Heart, Southwest has set a goal to work toward
achieving net zero carbon emissions by 20505.
Southwest has also set near-term targets and a three-pillar
strategy to achieve its environmental goals. Learn more by visiting
Southwest.com/planet.
1 Effective Aug. 5,
2024, the airline will serve 117 airports.
2 Based on U.S. Dept. of Transportation quarterly
Airline Origin & Destination Survey since Q1 2021
3 Fulltime-equivalent active
Employees
4 1973-2019 annual profitability
5 Southwest's net zero by 2050 goal
includes Scope 1, Scope 2, and Scope 3 Category 3 emissions only
and excludes any emissions associated with non-fuel products and
services, such as inflight service items.
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SOURCE Southwest Airlines Co.