Southwest Airlines' corporate travel demand improved sequentially throughout the third quarter, but bookings for the new year are "extraordinarily low right now," Southwest COO Andrew Watterson said during a Thursday morning earnings call. September was "particularly strong" with "multipoint passenger growth," he said.
Third-quarter corporate sales for future travel excluding government travel increased 5 percent year over year, "so we're seeing corporates improving," Watterson said, but added that trip growth was down. "Normally, since corporate is schedule-sensitive, not price-sensitive, that should have led to kind of a reduction in share, and we didn't necessarily see that. So, we see good trends with demand for Southwest Business."
Watterson predicted that assigned seating, set to begin in the first quarter of 2026, will unlock additional corporate growth. "Right now, through various different measures, we think our domestic managed business share is in the mid-teens, which is below our overall capacity share," he said. "And we think extra legroom [and] assigned seating should give us tailwinds in our corporate share."
Southwest Q3 Metrics
Southwest reported record third-quarter passenger revenue of more than $6.3 billion, a 1 percent increase year over year. Total revenue exceeded $6.9 billion, up 1.1 percent for the same period and also was a record for the third quarter for the carrier. Net income was $54 million compared with $67 million a year prior.
Capacity for the quarter increased 0.8 percent year over year. The average fuel cost was $2.40 per gallon.
Southwest projects fourth-quarter capacity to increase 6 percent year over year, with average fuel costs projected at $2.20 to $2.30 per gallon.
The carrier earlier this month received its first aircraft with its new cabin design that includes new seats, in-seat power and larger overhead bins, and entered it into service Oct. 16. Southwest also will begin operating with assigned and premium seating on Jan. 27.
Beginning Oct. 24, the carrier will offer free Wi-Fi for Rapid Rewards loyalty program members, sponsored by T-Mobile.
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