Southwest Airlines reduces capacity and brings out guidance

Southwest Airlines President Donald Trump’s trade war has created the industry’s biggest uncertainty since the Covid-19 pandemic, making it the latest US airline on Wednesday.

As the economy could deteriorate, it is little clear about how consumers will behave, and airlines have struggled to accurately predict their business.

Travel is a discretionary item for many consumers and businesses. The trade war has led to increased prospects of slowing economic growth and increasing inflation, which has led to both tourists and businesses sitting closely, leading to increased travel spending.

Southwest said it could not reconfirm its $1.7 billion profit before interest and taxes in 2025 and $1.7 billion forecast of around $3.8 billion in 2026.

“In the present macroeconomic uncertainty; The company said:

Southwest shares fell 3% in after-hours trading.

Walmart, Delta Air Lines warns of sales volatility, slow growth

Alaska Airlines Group also elicited its 2025 profit forecast on Wednesday, citing general macroeconomic uncertainty.

Earlier this month, Delta Air Lines Frontier has abolished forecasts. Last week, United Airlines made two different predictions, saying it would be impossible to predict a macro environment this year.

Ticker	safety	last	change	change %
Luv	Southwest Airlines Co.	25.40	-0.12	-0.47%
alk	Alaska Air Group Inc.	41.48	-4.76	-10.30%
Dal	Delta Air Lines Inc.	41.37	-0.03	-0.07%
ULCC	Frontier Group Holdings	3.15	-0.07	-2.02%
ual	United Airlines Holdings Inc.	68.02	-0.01	-0.01%

This shows a dramatic reversal of the fate of US carriers, who flew high in the story of the new golden age around two months ago, as strong travel demand and close capabilities across the industry increased the prospects for a multi-year profit boom.

The lot is worse for airlines like Southwest, which rely primarily on price-sensitive leisure customers and serve the domestic US market.

Currently, the domestic market is the softest travel market, with airlines needing to stimulate demand with lower fares. And consumer spending is the weakest among low-income households.

Southwest Airlines risks losing customers with new bag policy, experts say

Southwest said bookings have softened during domestic leisure trips throughout the March quarter. There, airlines have more exposure than their rivals like Delta and United.

Ticker	safety	last	change	change %
Dal	Delta Air Lines Inc.	41.37	-0.03	-0.07%
ual	United Airlines Holdings Inc.	68.02	-0.01	-0.01%

There are few indications that the situation has improved as the company said revenue (representative of pricing power) for its units would be down 4% from a year ago this year.

Mitigating travel demand has exacerbated challenges in the Southwest. This has been having a hard time finding a foothold after the Covid-19 pandemic. That unshiny revenue is putting pressure on us to revamp our business models.

last year, Southwest announces plans We will be closing open seats, which have been the center of our brand image for over 50 years. In March, we announced plans to start billing customers on check bags and ended our unique free policy.

Southwest said there is no evidence that customers have abandoned the airline in accordance with recent policy changes. CEO Bob Jordan said he hopes the airline will introduce basic economy and bag fees next month, and is on track to start selling legroom seats allocated for the September quarter.

Click here to get your Fox business on the go

To protect margins amid soft demand, we will actively reduce capacity or seating for that flight later this year.

Southwest Adjusted loss reported LSEG data shows that it had a share of 13 cents in the first quarter compared to the 18 cents per share loss expected by analysts.

The company will discuss financial results in a call with analysts and investors on Thursday.