Southwest Airlines has come a long way since its holiday meltdown left tens of thousands of passengers stranded over the holiday season.
The airline still has a lot of fires it needs to put out. It’s dealing with labor unrest with both its pilots and its flight attendants, and it still has a long way to go to repair its reputation with customers who got burned during its Christmas problems.
But the nature of air travel forces people to be forgiving. People may swear “never again” when they’re dealing with a long delay or suffering through a cancellation, but reality often intervenes.
A lot of people likely said they never wanted to fly Southwest Airlines (LUV) – Get Free Report during its darkest days, but pricing and schedules almost certainly changed their minds. Even people who live near major airports have to deal with the fact that there are only so many flights between most cities and many of those won’t offer Southwest’s trademark mix of value and comfort.
That helped Southwest deliver record revenues and a nearly $700 million profit in its most recent quarter. Now, with the company expecting to make a profit of between $1 billion and $1.5 billion, CEO Bob Jordan said the airline is going to make some major changes that will impact many of its customers.
Southwest had a very strong 4th of July holiday with an almost perfect record.
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Southwest Is Redoing Its Schedule
Southwest will move from a pilot shortage constraining its capacity to an airplane shortage causing the same problem later this year. It’s also dealing with changes in customer demand due to changing views of travel after the covid pandemic.
That’s causing the airline to make some massive changes, according to Jordan, who addressed his company’s plans during its second-quarter earnings call.
“As we shared this morning in our release, we are revamping our 2024 flight schedules,” he said. “While our network is largely restored at this point, it is not optimized, especially for post-pandemic shifts in business travel.”
The changes to the schedule will take some time to implement.
“Those adjustments to the network will be largely complete by the March 2024 flight schedules, and we expect those efforts and the continued maturation of development markets to generate an incremental $500 million in pre-tax profit in 2024. The changes will also reduce the percentage of system capacity and development by more than half, returning to normal pre-pandemic levels by the end of next year,” he added.
Southwest Airlines Schedule Changes Are Mostly a Positive
The changes will bring the airline back in demand which should be a net positive for passenger sentiment. That does not mean that everyone will be happy as some customers will lose flights and routes that they previously used.
Southwest, however, is adding capacity, so that should mean more passengers finding the flights they want at times that work for them.
“We already have our schedule published through March 6, 2024, and currently expect first quarter 2024 capacity to be up in the range of 14% to 16% on a year-over-year basis. Now, keep in mind that nearly 90% of that year-over-year growth is carryover from 2023,” Jordan said.
The airline won’t keep growing its capacity at quite the same pace throughout the rest of next year.
“For the remainder of 2024, we are planning for a sequential deceleration in year-over-year growth in each quarter next year as we work our way back to our long-term goal of mid-single-digit growth year-over-year,” he added.