Southwest Airlines CFO Tom Doxey provided an update on the company's strategic initiatives and current demand trends at a conference on May 22, 2025. He noted that second-quarter unit revenue is approximately six points worse than initially expected, with no industry-wide inflection back in demand.
Despite the challenging demand environment, Doxey reiterated the company's incremental EBIT targets from initiatives: $1.8 billion for 2025 and over $4 billion for 2026. He detailed that $1 billion is from core business improvements, $400 million from new initiatives (including basic economy, bag fees, and loyalty program changes), and $400 million from cost reductions, such as the 15% corporate job cuts.
Doxey confirmed a 1.5-point capacity reduction for the second half of 2025, placing full-year capacity at the lower end of the 1-2% growth guidance. He emphasized that the significant impact of new revenue initiatives, like extra legroom seats and assigned seating, will be more heavily weighted towards 2026 as they fully ramp up.
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