Southwest is making big route changes as it prepares to reveal new details of its turnaround plan

25.09.2024 - 18:33 / insider.com

Southwest Airlines is slashing unprofitable routes as it faces intensifying pressure from an activist investor to boost revenue and cut costs.

The budget airline plans to cut some 340 pilots and flight attendants from its busy Atlanta base, CNBC first reported Wednesday . A company spokesperson confirmed the news, citing lower bookings that have forced it to reduce service. Changes won't take effect for six months.

The spokesperson also noted a delay in new plane deliveries amid Boeing's 737 MAX issues.

"We continue to optimize our network to meet Customer demand, best utilize our fleet, and maximize revenue opportunities," the spokesperson said. "Decisions like these are difficult for our Company because of the effects on our People, but we have a history of more than 53 years of ensuring they are taken care of."

Bloomberg reported the reductions would see Southwest's Atlanta operations drop by about a third, from 567 daily flights to 381, with 16 cities cut altogether.

Southwest was the second-largest operator in Atlanta behind Delta Air Lines, leaving customers will fewer choices out of the world's busiest airport.

The airline announced plans in April to cut flights from Chicago O'Hare by one-third — an airport Southwest only started flying to in 2021 after favoring Chicago's smaller Midway airport for years.

The airline also left four airports in August as part of a cost-cutting and restructuring plan, including Bellingham International Airport in Washington state, Mexico's Cozumel International Airport, Houston's George Bush Intercontinental Airport, and Syracuse Hancock International Airport in New York.

Despite its shrinking network, Southwest is boosting flights where it has an edge. Most notably, it has added six new routes from Nashville and its first red-eye flights to Hawaii from the US mainland, which will start in February.

The network shakeups are part of a slew of strategy changes as the industry faces headwinds and a hedge fund with a sizable new stake pushes for changes.

Southwest announced in July it would end its long-standing open-seating policy and start selling premium seats. Its also committed to updating its outdated technology, which led to a crippling meltdown in December 2022.

Further changes are likely to be announced at an investor day on Thursday, which will lay out Southwest's future as we know it.

It's likely the low-cost carrier, famous for its open-seating and two free checked bags, will mold more into a mainline carrier — something Elliott believes will boost profits and improve the customer experience.