Southwest’s Q4 fortunes looking up as ‘tactical’ changes start paying off

Southwest Airlines is the latest US carrier to raise fourth-quarter financial expectations thanks in part to the early returns of a sweeping plan to overhaul its business model. CE Bob Jordan said during Goldman Sachs’ industrials and materials conference on 5 December that Southwest’s more positive outlook is also based on a backdrop of strong demand for holiday travel and reduced passenger capacity throughout the USA. “The holidays are coming in very strong,” he says. “I think the main thing is the tactical initiatives that we put into place to work the network, really work on the things that we are doing to mature the revenue-management system.” Southwest now expects revenue per available seat mile to rise 5.5-7% year on year, versus its previous forecast of a 3.5-5.5% increase. The carrier also expects fourth-quarter passenger capacity, as measured in available seat miles, to be down 4% relative to the October-December period of 2023. Southwest’s end-of-year update mirrors that of leisure-focused competitor JetBlue Airways, which issued a brighter fourth-quarter outlook on 4 December. New York-based JetBlue also cites a strong demand environment and a financial turnaround plan that may be beginning to bear fruit. Several US carriers are trimming their networks and introducing new seating options amid a broad shift toward higher-paying consumers. <br/>