The Main Squawk: Southwest to rollout premium seating alongside assigned seating in 2026
Last week, Southwest held its long-awaited “Investor Day” in Dallas, announcing major changes in how the Airline will conduct its business. The Company has been under scrutiny from activist investor Elliott since the spring, prompting the Airline to make leadership changes and several course corrections to return to profitability.
Among the announced changes, the Company revealed that four out of five customers prefer to have a seat assignment as opposed to scouring the airplane for an open seat, which is ironic considering it once made crystal-clear that customers actually like having the freedom to choose their own seats. The announcement means: gone will be the days of sitting awkwardly or putting bags on empty seats in an effort to keep a row entirely to yourself.
The assigned seating policy affords the Airline a mechanism to sell premium seats with features like extra legroom, additional recline, and the ability to board earlier in the boarding process. These are all things the Company’s critics want to see, including Elliott, which remains steadfast on ousting CEO Bob Jordan despite the Airline’s plans to improve its business.
The Company says it will begin selling tickets with assigned seats next year for flights scheduled to depart in early-2026.
Southwest announced its first-ever airline partnership with Icelandair during its “Investor Day” last week, and plans to add another partner at some point next year. The Dallas-based airline will utilize the partnership with Icelandair to connect passengers to Europe and will further expand the reach of its Rapid Rewards program.
Combined with Southwest’s plans to move to an assigned seating model, the announcement to partner with Icelandair marks an interesting shift in how the Company views its rewards program. Currently, a customer seeking to fly by way of redeeming Rapid Rewards points can only use them on Southwest. This is great if you want to fly anywhere across the Airline’s route network, but if you want to fly abroad, you’re out of luck.
Partnering with other airlines gives customers the ability to travel further, inflating the value of the Airline’s already mighty $9.1 billion Rapid Rewards program. Given the size of its plans, the Company may need to post something as collateral to maintain the aggressive timeline is desires. Actions like this provide a pathway to secure additional funding, should it be necessary. (This is also evident in the Company’s intent to monetize its orderbook with Boeing, as Gary Leff at View from the Wing writes.)
Boeing aerospace workers rejected the Company’s latest proposal, which the manufacturer threatened was their “best and final” offer. The proposed contract was slid across the table without any discussion from the International Association of Machinists and Aerospace Workers (IAW) and yet somehow Boeing expected the offer to exceed expectations.
Workers continue to advocate for stronger retirement benefits that they believe will help attract the next generation of aircraft builders.
The strike prompted Boeing to suspend production of its best selling, problem-prone 737 jet last week. Wall Street analysts suspect the Chicago-based aircraft manufacturer may be losing $500 million per week as a result of the Company’s failure to cut a deal with its workers.
Alaska debt is officially classified as “junk” by Moody’s, a private agency tasked with rating the quality of bonds. The Sea-Tac-based airline plans to use bonds issue debt to help cover some of Hawaiian’s accounts payable.
Hawaiian has ten outstanding orders for Boeing 787-9 aircraft with the option for eight more.
The Airline is also recovering from a non-CrowdStrike-related incident involving a computer outage this past weekend. For those curious: no, the outage did not resort to posting flight statuses on a whiteboard.
Delta CEO Ed Bastian took shots at Boeing this past weekend, claiming that the aircraft manufacturer has to get its act together to remain competitive. The Atlanta-based airline has 100 orders of 737-10 MAX aircraft and plans on receiving deliveries as early as 2027.
Mr. Bastian really let go during this event at the Minneapolis-St. Paul Airport, adding some critiques for U.S. Transportation Secretary Pete Buttigieg, which some are calling nothing more than “insults, finger pointing, and bragging.” But some of that bragging wound up coming true just a few days later when it announced its first nonstop route from Salt Lake City to Seoul a few days later.
Delta has long pondered the idea of making Salt Lake City an international gateway, and it’s done exactly that by adding a route from Mormon Country to Seoul. Time will tell which other routes it adds to its operation there.
Southwest will eliminate one-third of its Atlanta operation as early as April 2025, estimated to affect 300+ pilots and flight attendants.
Editor’s Note: While the term “eliminate” is a bit harsh, since The Associated Press used it in their article, we have to include it here. In reality, the Airline is likely to disperse the estimated 300+ pilots and flight attendants throughout its system via displacement.
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