Southwest Airlines adjusts loyalty perks and fees

DALLAS - Southwest Airlines Co. (NYSE: LUV), a $16.7 billion market cap airline currently trading at $28.18, has announced a series of changes to its customer loyalty program and fee structure, aiming to enhance revenue growth and offer a more diverse range of travel experiences. These updates, effective for flights booked from May 28, 2025, are part of the airline’s broader strategy to attract new customer segments and deliver profitability for shareholders. According to InvestingPro analysis, the stock appears slightly undervalued at current levels, with analysts expecting net income growth this year.

Under the new initiative, Southwest will modify its baggage policy. Rapid Rewards A-List Preferred Members and Business Select fare customers will continue to receive two free checked bags, while A-List Members and select customers will be entitled to one free checked bag. Rapid Rewards Credit Cardmembers will also be credited for one checked bag. Other customers will incur charges for their first and second checked bags, subject to weight and size limitations.

The airline has also revised the earning rates for its Rapid Rewards points. Passengers purchasing Business Select fares will now accumulate more points, whereas those opting for Wanna Get Away and Wanna Get Away Plus fares will earn fewer points. Additionally, the redemption rates for flights will vary, depending on demand.

In an effort to provide options that cater to different traveler needs, Southwest will introduce a new Basic fare category for its lowest-priced tickets, which will be available for purchase starting May 28, 2025. This fare will be accompanied by assigned seating and extra legroom options.

Southwest has expanded its distribution channels by partnering with Expedia to offer flight and fare products, a collaboration that began last month. The airline also updated its policy on flight credits, which will now expire one year or earlier from the ticketing date, depending on the fare type, with Basic fares expiring six months post-ticketing.

These changes complement ongoing initiatives, such as the introduction of assigned seating, extra legroom options, and the recent airline partnership with Icelandair. Southwest also boasts high on-time performance and operational reliability, having operated 98.3 percent of its published flight schedule without cancellations as of February 28, 2025. The airline’s operational excellence has contributed to its revenue growth of 5.34% over the last twelve months, reaching $27.48 billion. For deeper insights into Southwest’s performance metrics and growth potential, InvestingPro subscribers have access to over 30 additional key financial indicators and exclusive analysis.

The airline reaffirms its commitment to core principles, including exceptional customer service, a strong domestic network, and a valuable loyalty program, while maintaining a healthy 2.56% dividend yield for shareholders. This information is based on a press release statement from Southwest Airlines Co. For comprehensive analysis and detailed financial metrics, investors can access Southwest’s full Pro Research Report, available exclusively on InvestingPro, along with reports on 1,400+ other top US stocks.

In other recent news, Southwest Airlines reported a series of significant developments. The company announced a plan to reduce its leadership positions by approximately 1,750 jobs as a cost-cutting measure, impacting 15% of its corporate roles, including senior leadership and director positions. This decision marks the first time Southwest has resorted to layoffs in its corporate sector. Additionally, Southwest Airlines has amended its agreement with investment firm Elliott Management, allowing Elliott to increase its economic exposure in the airline from 14.9% to 19.9%. This amendment extends restrictions on Elliott’s acquisition of more than 12.49% of Southwest’s common stock until April 1, 2026. In leadership changes, Southwest appointed Tom Doxey as its new Executive Vice President and Chief Financial Officer, effective March 10. Meanwhile, board members Eduardo F. Conrado and Elaine Mendoza will not seek re-election and plan to retire following the 2025 Annual Meeting of Shareholders. Lastly, a Southwest Airlines plane narrowly avoided a potential collision with a smaller business jet at Chicago Midway International Airport, with the FAA confirming an investigation is underway.

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