The airline experienced 47 consecutive years of profitability between 1973 and 2019. However, challenges such as the pandemic-related downturn and operational disruptions in late 2022 led to significant losses exceeding $1.1 billion. In response to these difficulties, activist hedge fund Elliott Investment Management acquired more than a 10% stake in Southwest Airlines and influenced changes at both board and management levels.
A settlement reached in October 2024 resulted in new directors joining Southwest’s board and former CEO Gary Kelly stepping down as executive chairman. Under this new leadership structure, several longstanding policies were changed: layoffs were introduced; free checked bags ended on May 28, 2025; assigned seating was adopted; premium seating options were added; basic fares increased; red-eye flights were introduced; flight-credit validity was limited to one year; fares began appearing on third-party websites; and a codeshare agreement was established with Icelandair.
These changes mark a departure from some of Southwest’s traditional customer-friendly practices that contributed to its popularity among travelers. The airline now also has interline agreements with carriers such as China Airlines and EVA Air, extending its virtual reach beyond North America into Europe and Asia.
Despite these shifts, Southwest remains committed to operating an all-Boeing 737 fleet—currently numbering over 800 jets—with more than 500 additional aircraft on order. This single-type fleet continues to underpin efficiencies in pilot training, maintenance, scheduling, and spare parts management.
While investors may view recent strategic moves positively for improving financial performance in the near term, it is uncertain how passengers or employees will respond over time. Changes like ending long-standing employment guarantees have altered perceptions among staff and customers alike.
Southwest Airlines’ business model forced other U.S. carriers to unbundle products and lower fares for broader access to air travel. As it adapts under new governance pressures from major shareholders like Elliott Management https://www.cnbc.com/2024/06/03/southwest-airlines-elliott-management-takes-stake.html, industry observers are watching closely to see if it can maintain its unique position or will continue converging toward legacy carrier practices.