Southwest Airlines Slashes 2024 Growth Plans Amid Falling Profit and Rising Costs

Southwest Airlines is throttling back its 2024 growth plans due to decreased profit margins, higher fuel and labor costs, as well as a slow recovery in business travel. The airline will also revise international routes, rework its aircraft order, and has reached a tentative union contract with flight attendants.

Southwest Airlines reported a third-quarter profit of $193 million, a 30% decrease from the same period last year. The drop in profit is attributed to higher labor and fuel costs, with labor costs increasing by over 17%.
The airline will slow its growth in 2024 to improve profit margins, reducing its growth rate from a predicted 16% for the first quarter to a range of 10% to 12%. Full year growth for 2024 is expected to be between 6% and 8%.
Southwest has renegotiated its aircraft order with Boeing, securing the delivery of 80-90 new 737 Max jets per year through 2031. This includes the addition of 108 737 Max 7 jets, which will allow Southwest to retire some of its older, less efficient planes.
Southwest will shift most of its Caribbean flights from Fort Lauderdale to Orlando in 2024. This move is likely prompted by intense competition with Spirit and JetBlue in Fort Lauderdale.
The airline has reached a tentative new contract agreement with the union representing its 18,000 flight attendants. However, Southwest, unlike its three major rivals, has not finalized an agreement with its pilots, who represent a significant portion of its labor costs.