Southwest may be adding its first premium seats, but CEO Bob Jordan is promising that the airline won't lose its low-cost identity.
The airline announced Thursday that planes are getting extra-legroom seats and that its signature open-seating policy is going away.
"We want to do this whole thing the Southwest way," Jordan said during the company's Q2 earnings call. "We are known for common sense, not adding complexity."
Southwest's extra-legroom seats, Jordan said, won't come with any frills. The extra-legroom seat itself won't be different than the other seats in coach.
The Q2 earnings call came just hours after Southwest announced plans to configure new aircraft and retrofit existing planes to have an extra-legroom product across approximately a third of the cabin. Southwest will also begin assigning seats, with the first assigned-seat bookings expected sometime next year.
Both initiatives are aimed at closing the profit-margin gap between Southwest and its rivals -- Delta, United, and, to a lesser extent, American.
For the second quarter, Southwest reported pre-tax income of $478 million on $7.35 billion of revenue, for a pre-tax margin of 6.4%. In comparison, United's Q2 profit margin was 12.1%.
The carrier's lack of a premium product has been problematic since the pandemic, as the U.S. airline industry's revenue growth for premium cabins and paid seats has consistently outpaced economy since 2020.
Southwest offered few specifics on the upcoming changes during the earnings call.
Will Southwest planes end up with fewer seats?
An analyst asked whether Southwest would retain the same number of total seats per plane as it adds extra-legroom seats. Jordan was noncommittal.
We want to do this whole thing the Southwest way. We are known for common sense, not adding complexity.– Southwest CEO Bob Jordan
"Not just in the extra-legroom section but in the remainder of the cabin, we want to have an attractive pitch, he said. "So we're still working on the details."
Southwest's Boeing 737-8 planes currently have 32 inches of pitch, which is among the best for an economy product among U.S. airlines. The carrier's smaller 737-7 planes have 31 inches of pitch, according to Aerolopa.
Southwest said it plans to roll out the extra-legroom product in conjunction with the new seats it has developed with the manufacturer Recaro, which it revealed in February. The airline doesn't have a timeline yet for the launch; the pace of FAA certification will be a factor.
The carrier's existing 800-plus aircraft also will be retrofitted.
Regarding seat assignments, Jordan said his team is working through a slew of details while developing a boarding process. In so doing, Southwest said it has conducted live boarding tests and completed 8 million digital boarding simulations.
The goal of the new process, he said, is to retain what he described as the calm feeling of Southwest's current boarding procedure while speeding, or not slowing, aircraft turn times.
Ultimately, assigned seating should reduce stress for customers, who currently worry about not having a seat assignment, said Ryan Green, the airline's newly appointed executive vice president of transformation. Green said that 60% of Southwest flyers do online check-in within 30 seconds of when it opens, which demonstrates their anxiety.
Southwest's revenue of $7.35 billion for the second quarter was up 4.7% from last year and beat analyst estimates by $10 billion, according to the investment website Seeking Alpha. The carrier reported net income of $367 million.