Southwest Airlines Shifts to Assigned Seating, Faces Financial Challenges

Southwest Airlines has ended its decades-long open seating practice, introducing assigned and premium options due to customer demand. The move resulted in a 5.5% increase in shares, though analysts doubt significant margin improvements.

Amid pressure for a new board from Elliott, the airline also plans to launch red-eye flights in 2025. However, its Q4 results exceeded expectations. In contrast, American Airlines faces financial struggles, cutting profit forecasts and experiencing a 46% drop in profits.

The industry grapples with fierce competition and rising labor costs, impacting carriers like American Airlines. Southwest's strategic changes aim to align with customer preferences and enhance profitability in a challenging market environment.