After a reported 51% decrease in profit last quarter, Southwest says it will be making big changes to its operation.
Transcript:
Conway Gittens:
I’m Conway Gittens reporting from the New York Stock Exchange. Here’s what we’re watching on TheStreet today.
An economic surprise on Thursday could offset earnings angst one-day after the biggest stock market sell-off in 1-1/2 years.
The U.S. economy expanded at a 2.8 percent annual rate during the second quarter, according to Gross Domestic Product figures released by the Commerce Department. Economic growth showed a healthy uptick from the 1.4 percent rate seen the prior quarter.
Earnings season, however, remains a concern for Wall Street. There was a huge earnings miss at Ford and profits at American Airlines slumped 46 percent.
Sticking with airlines…for the first time in its 50-year history, Southwest Airlines is ditching open seating.
The airline says “The research is clear and indicates that 80% of Southwest Customers, and 86% of potential Customers, prefer an assigned seat. When a Customer elects to stop flying with Southwest and chooses a competitor, open seating is cited as the number one reason for the change.”
Southwest is also shaking up the passenger experience in other ways. It is redesigning the inside of the plane to create premium seating with more legroom, which of course, means higher ticket prices. In addition, it will start flying “red-eye” overnight flights for the first time as well.
The changes come amid intense competition across the airline industry, with a glut of airline seats chasing increased demand. In its latest quarter, Southwest posted a 51 percent drop in profit.
That’ll do it for your Daily Briefing. From the New York Stock Exchange, I”m Conway Gittens with TheStreet.
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