Southwest Airlines (LUV) announcement On Thursday, the airline announced it would eliminate open seating, a radical departure from a decades-old practice. Instead, it will begin assigning seats and offering premium seats with more legroom.
Shares of the national carrier rose more than 2% in early trade.
Bob Jordan, Southwest Airlines CEO, said, “Our implementation of assigned and premium seating is part of an ongoing, comprehensive upgrade to the customer experience, one that customers overwhelmingly prefer, according to research.”
The low-cost airline has a tradition of open seating for more than 50 years. Customers taking longer flights prefer assigned seats, according to Southwest.
Changes are coming under pressure from activist investor Elliott Management, which warned earlier this month of a proxy fight as it seeks a “new, truly independent board.”
Southwest also announced it would add the introduction of night and overnight flights, with the first routes beginning on Valentine’s Day in 2025.
The carrier also reported quarterly results Thursday. Adjusted earnings per share were $0.58, compared with Wall Street’s expectations of $0.51. Revenue was $7.35 billion, compared with analysts’ expectations of $7.33 billion.
Domestic carriers have faced headwinds in recent months, despite a strong summer travel season.
Increased competition and rising labor costs have weighed on profits. National carriers have been forced to cut fares.
American Airlines (AAL) cut its forecast Thursday, sending shares of the airline down 5%.
Ines Ferre is a senior economics journalist for Yahoo Finance. Follow her on X at @ines_ferre.
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