The bevy of changes Southwest Airlines in the past year has implemented in its inflight and airport products are the final piece necessary to grow the carrier's corporate share, executives said Thursday during the company's fourth-quarter earnings call.
While Southwest in recent years has worked to increase its prevalence in corporate programs by growing its presence in global distribution systems, executives said Thursday that the most effective draw would be carrier's transformation, which continued this week.
Southwest on Jan. 27 implemented assigned and extra-legroom seating, which necessitated a new boarding procedure. These changes were on top of several others for the carrier in 2025, including charging for bags, adding six international partners and adding a basic economy fare.
Southwest president and CEO Robert Jordan said Thursday that the initiatives were based on customer demand, "providing what they want today, which is different than what they wanted five and 10 years ago."
"This has nothing to do with copying anybody," he said. "This has to do with offering our customer what they want."
Southwest executives also maintained that the product changes are particularly appealing to corporate travelers.
"We're encouraged that we'll see share shift to Southwest Airlines because the product is a stronger offering now, especially with corporate," Jordan said, adding that "we think we can grow our corporate share. … We see meaningful opportunities ahead to grow earnings from areas such as route network optimization under a backdrop of improved operating margins in the business, increasing our corporate customer base driven by product changes that better appeal to the business traveler."
Southwest COO Andrew Watterson added that the carrier has invested in its corporate infrastructure over recent years, noting its presence in GDSs. But what was missing was "the product that corporate travelers want to buy," he said. "We have this new product, we will combine that with marketing efforts, our salesforce efforts, incremental distribution efforts, and we think there's upside to our corporate business from this new product on top of the infrastructure we already built."
For performance, excluding shutdown-affected government travel, "which was kind of volatile there in Q4," Southwest's corporate business was "up mid-single digits" year over year, Watterson said. "Entering this year and in January, we had very high bookings that others have reported. So, a strong start to the year in corporate bookings."
Southwest also "anticipates additional benefit" to the corporate segment "once the tools and expense policies calibrate to our new offerings," Watterson said. "What's not in our guide is this kind of medium-term benefit from increased corporate share or increased corporate revenue as people buy our ancillaries on the company dime. That is something that will unfold over [the] medium term."
Southwest Q4, Full-Year 2025 Metrics
Southwest fourth-quarter passenger revenue was nearly $6.8 billion, up 8 percent year over year, with total quarterly revenue of more than $7.4 billion, up 7 percent.
Full-year passenger revenue was more than $25.5 billion, a 2 percent increase year over year, while total 2025 revenue was more than $28 billion, a 2 percent increase.
Net income for the quarter was $323 million compared with $261 million a year prior. Full-year net income was $441 million compared with $465 million in 2024.
Fourth-quarter capacity increased 5.8 percent year over year, with full-year capacity up 1.6 percent compared with 2024. Average fuel cost was $2.45 per gallon for the quarter and $2.41 per gallon for the full year.
Southwest estimates capacity for the first quarter will increase 1 percent to 2 percent year over year and increase 2 percent to 3 percent for full-year 2026. Projected first-quarter average fuel costs are $2.40 per gallon.
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