Latest news with #BobJordan
Business Insider
3 days ago
- Business
- Business Insider
Southwest CEO says changes like charging for seat bookings and checked bags will make it over $4 billion next year
Southwest Airlines expects to make over $4 billion from the array of changes it's introducing. That includes scrapping its signature policies of unassigned seating and the trademarked "Two bags fly free." At the Bernstein Strategic Decisions Conference on Thursday, CEO Bob Jordan said the airline expects an incremental EBIT contribution of $4.3 billion in 2026. "It's hugely impactful to the business and to our margins," he added. On Wednesday, Southwest started charging $35 for a first checked bag and $45 for a second one, although all loyalty members and credit card holders can get one for free. "Bag fees, credit exploration, [and] changes to the loyalty program" are expected to contribute $800 million, Jordan said. While changing the seating system is still "months away," it is expected to generate another $1.5 billion in 2026. Introducing assigned seating is designed to encourage passengers to pay to choose their seat and for premium options like extra legroom. "85% of the customers who won't choose us want assigned seating," Jordan said, adding it is also the biggest reason they don't fly with Southwest. The other $2 billion is split between cost-cutting measures and "base business changes," such as improving the airline's revenue management system. Budget airlines like Southwest have seen their profits tumble since the pandemic. Increased fuel and labor costs, plus domestic overcapacity, have made it harder to fill planes, while fliers are more interested in paying for premium options. As Jordan said on Thursday: "Let's answer the question of what do customers want? And they want segmentation of the cabin. They want a variety of product offerings. They want access to premium." Southwest has also faced pressure from the activist firm Elliott Investment Management. The new changes seem to be encouraging Wall Street. Southwest's share price has risen over 20% in the past month. Plus, Deutsche Bank analysts upgraded the stock from a Hold rating to a Buy on Thursday. "Southwest is in the middle of the largest transformation in company history and we are confident that its new board and management team will execute its transformation plan with considerable success," they wrote in a report.
Skift
6 days ago
- Business
- Skift
Southwest's Overhaul: New Bag Fees, Seating Changes – What's at Stake
Southwest's most iconic perk ends Tuesday. While Southwest has received flak from customers, executives hope bag fees will shore up profitability. A beloved perk among Southwest customers is coming to an end on Wednesday: No more free checked bags. Soon, it will cost customers $35 for a first checked-in bag and $45 for the second. Southwest made the monumental decision to charge bag fees in March following a series of other major changes to its business model. Bag fees had long been one of Southwest's biggest differentiators from other airlines, and executives at the company had stressed that the policy was beneficial to Southwest's bottom line. 'We're not looking at this point to change that policy," Southwest CEO Bob Jordan said during an earnings call last July. "Our industry-leading set of initiatives of customer-friendly policies, and you know the list, is a big part of what attracts people to Southwest Airlines. And after fare and schedule, bags fly free is cited as the #1 issue in terms of why customers choose Southwest." The decision to start charging bag fees was met with pushback from customers, but Wall Street and airline executives welcomed the news: Analysts for the potential revenue boost, other airlines for competitive reasons (Delta president Glen Hauenstein said Southwest customers would now be 'up for grabs.') What Is Changing at Southwest? Southwest will officially start charging for two checked bags on Wednesday. Customers who book Southwest flights on Tuesday will not be charged for checked bags, regardless of the travel date, according to a spokesperson for the company. The first checked bag will cost $35 and the second will cost $45. Who Do Bag Fees Apply to? The baggage fees apply to those flying basic economy, along with Southwest's Wanna Get Away Plus and Anytime fares. Customers who are flying on Business Select or are Southwest Rapid Rewards A-List Members will still be able to check in two bags for free. A-List members and Rapid Rewards credit cardholders will receive one free checked bag. Southwest will also start selling basic economy fares on Wednesday, replacing its Wanna Get Away fare. Customers cannot make free changes or receive same-day standby tickets with the basic economy fares. What About Assigned and Premium Seating? Another set of major changes coming to Southwest is assigned seating and premium seating. The carrier was long known for its open boarding process, but executives said that they found customers preferred an assigned boarding process and the option to book premium seats. Southwest expects to start operating flights with assigned seats in 2026 and will also start charging seat selection fees. Premium seats will be denoted by a light blue top and will also have deeper cushions and longer headrests. Why Is Southwest Making These Changes? Much of these sweeping changes come after Southwest's bitter battle with activist investor Elliott Investment Management, which had built a nearly $2 billion stake and won five seats on the company's board. The hedge fund had advocated for major leadership changes at Southwest, along with bag fees, assigned boarding and premium seats. Southwest also conducted its first-ever layoffs in February, slashing 15% of its corporate workforce. Ending its two bags fly free policy is a risk for Southwest. When the news first became public in March, customers took to social media to express their displeasure with the change. Since the announcement, most of Southwest's social media posts are filled with customers complaining about the recent changes. Southwest also hasn't posted anything about bag fees on its social media since the announcement. However, during Southwest's most recent earnings call in April, chief operating officer Andrew Watterson said the company had not seen a dip in bookings. Executives at the company argue that these changes are necessary for Southwest to remain competitive and shore up its profitability. More airlines have recently started increasing their baggage fees, citing inflation and rising operating costs. Airlines also raked in $7.3 billion from baggage fees in 2024, according to the Bureau of Transportation Statistics. What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies. The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more airlines sector financial performance. Read the full methodology behind the Skift Travel 200.
Epoch Times
6 days ago
- Business
- Epoch Times
Southwest Airlines Ending Free Checked Bags Policy for Most Customers
Southwest Airlines will begin charging baggage fees for most passengers starting on May 28, marking a first in the airline's history. Southwest told The Epoch Times by email that it will charge $35 for a first checked bag and $45 for the second on flights booked or voluntarily changed on or after May 28. The checked baggage fees will apply to customers flying on Southwest's Basic, Wanna Get Away Plus, and Anytime fares, according to the airline's updated Customers traveling on Southwest's Business Select fares and Rapid Rewards A-List Preferred Members will continue to receive two free checked bags, subject to weight and size limitations. The airline also stated that A-List flyers will receive their first checked bag for free, while Southwest Rapid Rewards credit card holders will be credited for one checked bag. Southwest first Related Stories 4/24/2025 3/11/2025 Aside from imposing baggage fees, the airline said it will also introduce 'a new Basic fare' that will provide a lower-cost option with less flexibility for customers. Southwest also revised how Rapid Rewards points are earned. Customers on Business Select fares will earn more points, while those on Wanna Get Away and Wanna Get Away Plus fares will get fewer points. This move is part of Southwest's In addition to assigned seating, the airline also planned to introduce premium seating options, with a third of its seats offering up to five inches of additional legroom for a premium fare. Southwest's leadership has framed these changes as a necessary step to enhance revenue and improve its financial performance while maintaining customer satisfaction. 'We have tremendous opportunity to meet current and future customer needs, attract new customer segments we don't compete for today, and return to the levels of profitability that both we and our shareholders expect,' Bob Jordan, the airline's president, said in the 'We will do all this while remaining focused on what's made us strong—our people and the authentic, friendly, and award-winning customer service only they can provide.' Earlier this year, Southwest slashed 1,750 jobs—or 15 percent of its corporate workforce—marking an unprecedented move in its 53-year history. The airline The job cuts targeted primarily 'corporate overhead and leadership positions,' including senior leadership and director levels. Southwest stated that 11 senior leadership positions—representing 15 percent of its senior management committee—will be eliminated as part of the company's restructuring. Chase Smith and Tom Ozimek contributed to this report.
Yahoo
6 days ago
- Business
- Yahoo
AMD, Block upgraded: Wall Street's top analyst calls
The most talked about and market moving research calls around Wall Street are now in one place. Here are today's research calls that investors need to know, as compiled by The 5 Upgrades: HSBC upgraded AMD (AMD) to Hold from Reduce with a price target of $100, up from $75. The firm cites the recent re-rating of the shares on the back of the Saudi artificial intelligence deal and tariff de-escalation for the upgrade. BNP Paribas Exane upgraded Block (XYZ) to Outperform from Neutral with a $72 price target. The company's guidance for mid-teens gross profit growth acceleration in Q4 looks attainable as headwinds fade, such as high comps in bitcoin and continued pressure in the cash business, the firm tells investors in a research note. Jefferies upgraded Southwest (LUV) to Hold from Underperform with a price target of $33, up from $24, after having met with CEO and Vice Chair Bob Jordan and CFO Tom Doxey. Southwest laid out $1.8B of initiatives to hit EBIT in FY25, including $1B from tactical changes of yield/inventory management, new distribution channels, cuts to underperforming cities, and new intentional connections, notes the firm, which cites growing confidence in realizable initiatives for the upgrade. Truist upgraded Wingstop (WING) to Buy from Hold with a price target of $400, up from $274. The firm has increased confidence that Wingstop's same-store-sales will trough in Q1 and accelerate in 2026, with Truist card data pointing to improved trends in May. JPMorgan upgraded MSC Industrial (MSM) to Overweight from Neutral with a price target of $89, up from $73. MSC Industrial is a "turnaround story where growth has been a challenge," the firm says, adding that it sees potential support coming from tariff-driven price along with short cycle industrial end markets "that have appeared to remain stable on net. Top 5 Downgrades: Barclays downgraded CoreWeave (CRWV) to Equal Weight from Overweight with a price target of $100, up from $70. The firm continues to like the role Coreweave is playing in the new generative artificial intelligence world, but after a 157% rally since the initial public offering, Barclays says the stock's valuation "could be stretched to move higher off fundamentals in the near term." BTIG downgraded Globus Medical (GMED) to Neutral from Buy without a price target. On the Q1 earnings call, Globus provided a number of reasons why it missed estimates, but there were "nagging fears that there could be foundational cracks" in the base Spine business a year past the NuVasive integration, the firm tells investors in a research note. Baird downgraded Leidos (LDOS) to Neutral from Outperform with a price target of $163, down from $176. The firm believes headline risk across government services names is set to continue in the coming months, coupled with a weaker bookings' environment that started to emerge since Q1. Truist downgraded Jack in the Box (JACK) to Hold from Buy with a price target of $22, down from $51. The firm says that following another quarter of same-store-sales underperformance and upcoming promotions at competitors, it does not see near-term same-store sales catalysts driving the stock higher, despite Jack in the Box's "historically low valuation. " Oppenheimer downgraded Prothena (PRTA) to Perform from Outperform without a price target based on the Phase 3 AFFIRM-AL trial for birtamimab in amyloid light chain amyloidosis that failed to meet the primary endpoint of all-cause mortality. Jefferies and Cantor Fitzgerald also downgraded Prothena to Neutral-equivalent ratings. Top 5 Initiations: Benchmark initiated coverage of SanDisk (SNDK), which was spun out of Western Digital (WDC) in February, with a Buy rating and $58 price target. SanDisk is a leading manufacturer of flash memory, which is "a highly cyclical business," and the firm believes a cyclical upturn has begun that it thinks will extend into 2026. Piper Sandler initiated coverage of SoundHound (SOUN) with an Overweight rating and $12 price target. With its voice artificial intelligence platform, SoundHound is a direct play on the AI revolution, the firm tells investors in a research note. Deutsche Bank initiated coverage of Immunocore (IMCR) with a Buy rating and $65 price target. The firm says Immunocore's current valuation offers a favorable risk/reward where Kimmtrak's "niche" in metastatic uveal melanoma provides a "floor valuation" with expansion into second-line cutaneous melanoma providing upside. Wells Fargo initiated coverage of Expro (XPRO) with an Overweight rating and $12 price target. The firm says that compared to many small-cap capital oilfield service companies, Expro possesses very modest U.S. onshore exposure. Northland initiated coverage of Fold Holdings (FLD) with an Outperform rating and $10 price target. With over 600,000 active and 76,000 verified accounts, Fold serves as a key point of entry for consumers to engage with and integrate Bitcoin into their everyday lives, argues the firm, which views the company as "well-positioned" to take advantage of growing bitcoin adoption.
Forbes
6 days ago
- Business
- Forbes
Southwest Will Charge At Least $35 For Checked Bags Starting Tomorrow
Southwest Airlines passengers will have to pay at least $35 for a checked bag starting Wednesday, several outlets reported, as the airline is set to end its long-running free baggage policy that was a core part of its brand identity for several years. A Southwest Airlines Boeing 737 taxis at Ronald Reagan Washington National Airport in Arlington, ... More Virginia. According to the Wall Street Journal and Reuters, nearly all passengers flying on Southwest will need to pay $35 for one checked bag and $45 for a second starting Wednesday. The airline had announced the plan to charge for checked luggage in March without offering pricing details, but the Journal reported that Southwest employees have been informed about the fees through an internal message. Aside from charging for checked luggage, the airline will also start offering a new 'basic' fare tier starting Wednesday—a low-cost, no-frills offering that will replace the airline's current cheapest 'Wanna Get Away' tier. Basic ticket holders will be among the last to board the plane and will not receive perks like advanced seat assignments once it becomes available later this year. Southwest shares are up 1.20% in premarket trading on Tuesday. While announcing the move in March, the airline said its previous two free checked bags perk will still be available to passengers who hold the top-tier 'A-List Preferred' on its Rapid Rewards loyalty program or those who purchase the priciest 'Business Select' tickets. Flyers who hold a Southwest co-branded credit card or are on the second-highest loyalty program tier will be allowed to check in a single piece of baggage for free. Last year, the company announced plans to ditch another long-time core offering, its open seating policy, and replace it with assigned seating. In addition to assigned seating, the low-cost carrier will also start offering premium seating options that include extra legroom. According to the Journal, tickets with assigned seating will go on sale later this year. In its March announcement, the company described it as a 'strategic' bid to boost revenue. The airline's CEO, Bob Jordan, suggested these changes would allow the airline to reach new customer segments and 'return to the levels of profitability that both we and our shareholders expect.' Free checked bags have been core to Southwest's brand for years and the company even owns a trademark on the 'Bags fly free' slogan. When the seating policy changes were announced last year, the airline insisted that 'Bags fly free' would remain untouched. But Southwest came under intense pressure from activist investor Elliott Investment Management, which disclosed a $1.9 billion stake in the airline and criticized the company's leaders for showing a 'stubborn unwillingness to evolve.' According to the Bureau of Transportation Statistics, Southwest earned $83 million from baggage fees in 2024, which is an increase from the $73 million it made in 2023. However, this is still much lower than rivals like American Airlines, United and Delta, which earned $1.5 billion, $1.3 billion and $1.06 billion, respectively. Southwest Airlines Sets Fee for First Checked Bag at $35 (Wall Street Journal) Southwest Airlines Will Start Charging For Checked Baggage From May 28 (Forbes)
