Dallas-based discount airline giant Southwest Airlines announced a new three-year-plan Thursday that it said will transform its customer experience to drive revenue growth and return the carrier to “industry-leading profitability.”

Southwest rolled out the plan during its Investor Day, promising more choices and greater comfort for customers.

“We’re now ushering in a new era at Southwest, moving swiftly and deliberately to transform the company by elevating the customer experience, improving financial performance, and driving sustainable shareholder value,” Bob Jordan, president, CEO, and vice chairman of the board, said in a statement.

Key changes detailed today include Southwest’s transition to assigned seating, premium seating options, boarding with upgrades, and more. But one long-loved customer will remain: Bags will still “fly free.”

A ‘significant ongoing refreshment’ in response to activist investor pressure 

Today’s announcement comes after Southwest announced the upcoming departure of six board members as part of what the company called a “significant ongoing refreshment.”

The board presented its board overhaul plan in early September after Elliott Investment Management, an activist minority investor, called for changes earlier this year in the management and board at the airline.

New board member has prior connection to Southwest

Robert Fornaro

Along with its new three-year plan, Southwest announced on Thursday the appointment of Robert Fornaro as a member of its board of directors, effective immediately.

Fornaro is a veteran airline executive with four decades of experience in the industry.

Previously, he served on the board of Spirit Airlines beginning in May 2014 until September 2019 and as Spirit’s president and CEO from January 2016 until December 2018, during which time he led the low-cost carrier through a period of “substantial growth and transformation.”

Before that, Fornaro was president and CEO of AirTran Holdings from November 2007 until May 2011. He served as a consultant to Southwest Airlines from 2011 to 2014 following its acquisition of AirTran in 2011, and again from 2020 to 2024 following his resignation as president and CEO of Spirit Airlines.

“Bob is an exceptional leader and brings a wealth of industry experience to our Board,” Kelly said in a statement. “As a former consultant to Southwest, Bob has provided an objective review and important perspective on Southwest’s transformation plan, and he has a strong appreciation for Southwest’s unique business model and strategic advantages. His deep experience leading multiple airlines will be instrumental as we continue with our Board refreshment plan to add best-in-class Directors who will bring complementary skills and hold our Leadership Team accountable for delivering results.”

Key changes and a critical benefit retained

Southwest Airlines’ new cabin interior. [Photo: Stephen Keller, Southwest Airlines]

On Thursday, key themes and new initiatives detailed at Southwest’s Investor Day included changes “guided by data-driven research of travelers’ changing needs and expectations.” The airline said its evolution will provide “even more choices” for its customers and preserve aspects of the business that make the airline unique among its competitors: Key features of the plan include, per Southwest:

• Assigned Seating: Southwest will broaden its consumer appeal and boost demand through an assigned seating model. 
• Premium Seating: Market research shows that the preference for an assigned seat with extra legroom offers broad appeal for both business and leisure travelers. Southwest will offer extra legroom options with up to five additional inches of pitch for approximately a third of its seats while maintaining a standard economy seat pitch among the best in the industry. 
• Southwest Boarding with Upgrades: Southwest will evolve its boarding process with seat assignments while focusing on operational efficiency and improving the customer experience. 
• Bags Continue to Fly Free: Extensive research reinforces Southwest’s bags fly free policy remains the most important feature by far in setting Southwest apart from other airlines. 

“We’ve spent the past few years laying a foundation that serves as the base of our transformation,” Ryan Green, EVP of commercial transformation at Southwest, said in a statement. “We’ve already started rolling out modernized cabins with improved Wi-Fi, in-seat power, larger overhead bins, enhanced operational efficiencies, and optimized flight schedules. We will continue to build upon our unique competitive advantages, while adapting to consumer priorities in today’s dynamic environment.”

Boosting value and tapping revenue sources

In addition to offering more customer choice, Southwest said it will launch new capabilities and products designed to add value and revenue potential, including, per the carrier:

• Global Airline Partnerships: Southwest is formalizing partnerships with international carriers to expand its network and connect customers with more global destinations to generate additional demand for travel across the Southwest network. Icelandair will become Southwest’s initial partner with an expected launch in 2025 through Baltimore-Washington International Airport, which will serve as its first U.S. gateway for the carriers. 
• Getaways by Southwest: In 2025, the company intends to launch a new product, Getaways by Southwest, offering vacation packages that are unique to the industry and come with friendly policies that customers expect from a Southwest-operated venture. 
• Rapid Rewards Enhancements: Throughout the transformation, all members will earn and redeem points at the same rate that they do today, and Southwest will continue to offer no blackout dates, uncapped reward seat availability, and points that don’t expire. 

Southwest is also focusing on operational efficiencies to mitigate cost pressures and modernize processes, the airline said.

“The strategic vision announced today is designed to return us to financial prosperity and drive value creation,” said Southwest EVP and CFO Tammy Romo. “We have a clear and measurable path that we expect will enable us to cover our WACC in 2026 and achieve after-tax ROIC of at least 15% in 2027.”

Southwest’s three-year financial plan is expected to support its long-term targets for sustainable profitability, with approximately $4 billion in cumulative incremental run rate EBIT contribution in 2027 and ROIC of 15% or greater, well above WACC in 2027, the company said.

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