LAS VEGAS, NEVADA – MARCH 15: A Southwest Airlines Boeing 737 airplane departs from Harry Reid International Airport as another airplane taxis on March 15, 2025 in Las Vegas, Nevada. (Photo by Kevin Carter/Getty Images)
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Southwest Airlines said Wednesday that it will reduce its capacity in the second half of the year, as more signs point to weaker domestic bookings this year.
The airline said it expects unit revenue to be flat to down as much as 4% in the second quarter from a year earlier. Southwest said it is not reaffirming its guidance for earnings before interest and taxes for 2025 and 2026, citing “current macroeconomic uncertainty.”
United and Delta earlier this month announced plans to scale back their domestic capacity plans in the second half of the year. Delta also pulled its full-year forecast while United provided two forecasts, calling the U.S. economy “impossible” to predict.
The carrier’s first-quarter earnings and revenue beat analysts’ expectations.
Here is how Southwest performed in the first quarter compared with Wall Street expectations, according to consensus estimates from LSEG:
- Loss per share: 13 cents adjusted vs. loss of 18 cents adjusted
- Revenue: $6.43 billion vs. $6.40 billion expected
The carrier has laid out dramatic changes to its more than half-century-old business model over the past year, increasing the channels where it sells its fares to sites like Expedia, to launching a plan to end its open-seating model for assigned seats and and introducing restrictive basic economy tickets.
Next month, it plans to start charging many travelers to check their luggage, ending its decades-old policy of allowing customers to check two bags for free.
“We are seeing positive results on recently rolled out initiatives,” CEO Bob Jordan said in an earnings release.
In the first quarter, Southwest posted a net loss of $149 million, an improvement from a loss of $231 million a year ago, and revenue of more than $6.4 billion, which was up 1.6% from a year ago. Adjusting for special items, Southwest reported a loss of 13 cents a share for the three months ended March 31.
Southwest executives will face questions from analysts on a quarterly call at 12:30 p.m. ET on Thursday.
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