Southwest Airlines Withdraws Profit Forecast Amid Demand Decline

Southwest Airlines has withdrawn its profit forecasts for 2025 and 2026, citing macroeconomic uncertainty and weakening domestic travel demand, particularly among lower-income leisure travelers. The airline reported a net loss for the first quarter of 2025 and announced plans to cut flight capacity by 1.5% in the second half of the year, joining other major carriers in scaling back projections amid unpredictable booking trends. Southwest is implementing several changes to improve financial performance, including the introduction of checked bag fees, premium seating, basic economy fares, and layoffs of corporate workers. These moves mark a significant shift for the carrier, which is heavily dependent on domestic leisure travel and has historically differentiated itself with free checked bags. The broader U.S. airline industry is experiencing similar challenges, with multiple carriers reducing guidance due to rising costs and uncertain economic conditions. Despite the turbulence, Southwest's leadership remains focused on executing a turnaround plan to enhance its commercial offerings and shareholder value.