Southwest Looks for Solutions in Connections

With its load factor sagging, Southwest seeks to carry more one-stop traffic through its focus cities.

Dear readers,

I have been writing a lot of negative pieces about airlines with questionable leadership, and you might be expecting another after Southwest’s blah second quarter (net income of $213 million on revenues of $7.2 billion) and the airline’s revised predictions for the full year. Blaming poor demand, Southwest now predicts full-year EBIT of $600-$800 million — far lower than the $1.7 billion it had expected earlier this year.¹

But frankly, I am tired of poking at Southwest. By now, you know what I think about Bob Jordan — his inept leadership, his inability to set a clear direction — and Southwest’s board of directors, whose members² seem to believe that everything that worked 10 years ago at WestJet or Virgin America or IndiGo or Spirit will work today — and at Elliott Management, which set all this drama in motion. What else is there to say?

So today, I am returning to basics. I'm going to examine an interesting micro-development that I learned on Southwest's earnings call, expand upon it, and tell you why it is important.