Southwest Airlines to End Open Seating Amid Sweeping Changes

Southwest Airlines announced substantial shifts, moving away from its open seating policy to address financial pressures and investor demands for improved results. With declining earnings and delayed Boeing deliveries impacting revenue, the airline will introduce assigned seating and premium options by 2025, aiming to enhance customer appeal and financial performance.

Southwest Airlines announced major changes on Thursday, including the end of its longstanding open seating policy, as the company responds to investor pressure to improve financial performance and share prices. The changes come as the airline deals with reduced earnings due to delays in Boeing plane deliveries and a surplus of seats in the domestic market.

Shares of Southwest have declined by roughly 30% over the past two years, in contrast to the S&P 500's 37% rise. Activist investor Elliott Investment Management is pushing for leadership changes, indicating a potential proxy fight. CEO Bob Jordan stated that while Elliott has been uncooperative in discussions, the airline is committed to transformative steps to reach its financial targets.

Among these measures, Southwest plans to implement assigned seating and introduce premium, extended legroom seats, making up a third of seating on its fleet by 2025. These changes are contingent on approval from the U.S. Federal Aviation Administration. Additionally, the company will start overnight flights in February and remains in talks with Boeing over compensation for delivery delays.