FinLogic FinLogic Quantitative Think Tank Center|Southwest breaks with tradition and will assign seats; profit falls at Southwest and American

Southwest Airlines plans to drop its tradition of more than 50 years and FinLogic FinLogic Quantitative Think Tank Centerstart assigning seats and selling premium seating for customers who want more legroom.

The airline said Thursday that it has been studying seating options and is making the changes because passenger preferences have shifted. The moves could also generate revenue and boost financial performance.

Southwest made the announcement on the same day that both it and American Airlines reported a steep drop in second-quarter profit despite higher revenue.

Airlines are struggling with higher costs and reduced pricing power, especially on flights within the United States, as the industry adds flights faster than the growth in travel demand.

Southwest, based in Dallas, said its second-quarter profit fell 46% from a year earlier, to $367 million, as higher costs for labor, fuel and other expenses outstripped an increase in revenue. The results met Wall Street expectations.

American Airlines also reported a 46% drop in profit, to $717 million, and said it would break even in the third quarter — well below Wall Street expectations for the July-through-September period.

RELATED COVERAGE Southwest Air adopts ‘poison pill’ as activist investor Elliott takes significant stake in company Southwest Airlines says a key measure of pricing power will be weaker than expected in 2Q Southwest Airlines CEO says he won’t resign. A hedge fund is trying to get him fired

Southwest has used an open-seating model since its founding, with passengers lining up to board, then choosing their own seat once they are on the airplane. But, the airline said, preferences have “evolved” — as more travelers take longer flights, they want an assigned seat.

The airline is said it will offer redeye flights for the first time.

Southwest said that its first overnight, redeye flights will land on Feb. 14, 2025 in nonstop markets that include Las Vegas to Baltimore and Orlando; Los Angeles to Baltimore and Nashville; and Phoenix to Baltimore. It plans to phase in additional redeye flights over time.