Southwest Airlines Withdraws Forecast, Cuts Capacity Amid Demand Slump

Southwest Airlines reported a first-quarter loss and withdrew its earnings forecasts for 2025 and 2026, citing persistent macroeconomic uncertainty and softening travel demand, especially among price-sensitive domestic leisure customers. The company plans to reduce flight capacity in response to lower bookings and rising operational costs, while also rolling out new fee-based initiatives like baggage fees and basic economy fares. These changes come amid pressure from activist investors and follow recent leadership and board restructuring. Despite slightly outperforming analyst expectations for the quarter, Southwest's shares declined as investors reacted to the company's cautious outlook and industry-wide headwinds. Other major U.S. airlines have similarly withdrawn their forecasts, reflecting broad uncertainty in the sector. Analysts remain cautious, with a consensus 'Hold' rating on Southwest's stock as the company navigates ongoing challenges.