DALLAS: Southwest Airlines revealed its plans to reduce costs and focus on boosting profit in a video message to staffers ahead of the carrier’s investor day on Thursday in Dallas.
Southwest COO Andrew Watterson told staffers in the video, sent on September 19, that the company must make “difficult decisions” to raise its revenue. The video was first reported by the View from the Wing travel blog last week.
While the airline isn’t planning to reduce headcount, Southwest could reduce its footprint in some cities and staff could be transferred to other locations, according to CNBC.
Southwest plans to focus on profitable flying routes, the company said.
Following the carrier’s announcement this year about extending its flight schedules, a Southwest spokesperson told PRWeek that the airline’s “schedule will be extended Wednesday.”
“As part of a normal cadence of open and transparent communication with our employees, we recently shared information about how we design our network for operational reliability and profitability,” the spokesperson said about why Watterson addressed staff.
The carrier is under pressure to boost profitability from activist investor Elliott Investment Management, which has sought leadership changes at Southwest.
The airline over the summer revealed significant changes to its more-than-50-year-old business model in order to boost profitability. The carrier has plans to switch to assigned seating, start red-eye flights and sell seats with extra legroom.
Southwest has also started allowing its flights to be listed on Google Flights and on travel site Kayak, and it has modified its ads to target younger consumers, Watterson said in the video message.
Southwest plans to provide additional information at its investor day this Thursday at its Dallas headquarters, Bloomberg reported.
In Q2, Southwest reported net income of $367 million, down from $683 million a year earlier. The company’s unit revenue also fell 3.8% year-over-year compared to Q2 2023.