Southwest Airlines withdrew its multi-year financial forecasts and announced plans to reduce capacity in the second half of 2025, joining a growing list of major U.S. carriers scaling back amid rising economic uncertainty and weakening domestic travel demand. The move marks a dramatic reversal for the airline industry, which just months ago had been projecting a prolonged recovery fueled by strong post-pandemic demand.
"Amid the current macroeconomic uncertainty, it is difficult to forecast given recent and short-lived booking trends," the company said in a securities filing Wednesday. Southwest had previously forecast $1.7 billion in EBIT for 2025 and $3.8 billion for 2026, but has now withdrawn those targets.
Southwest shares fell 3% in after-hours trading. Alaska Air Group also pulled its profit forecast for 2025 on Wednesday, while Delta Air Lines, Frontier, and United Airlines have each revised or scrapped their guidance in recent weeks. United, in a rare move, issued two separate forecasts last week citing unpredictability in the U.S. economic outlook.
For Southwest, the pullback is particularly notable given its dependence on domestic leisure travel-currently the softest segment of the market. Lower-income households, a core demographic for the airline, are showing signs of belt-tightening, and the company said bookings weakened throughout the March quarter. Unit revenue is projected to decline up to 4% in the second quarter.
The Dallas-based airline is taking aggressive steps to revamp its decades-old business model to shore up profitability. This year it has introduced basic economy fares, opened up ticket sales through third-party platforms like Expedia, and announced the end of its open-seating policy. Starting next month, the airline will begin charging for checked bags-eliminating a hallmark free-bag policy that had differentiated Southwest from competitors.
Despite the turbulence, the airline posted better-than-expected results for the first quarter:
- Adjusted loss per share: 13 cents vs. expected 18 cents (LSEG)
- Revenue: $6.43 billion vs. $6.40 billion expected
- Net loss: $149 million vs. $231 million in Q1 2024
CEO Bob Jordan said the airline is "seeing positive results on recently rolled out initiatives" and remains on track to begin selling assigned and extra-legroom seats by the third quarter.
