Its recent changes might be unpopular, but Southwest Airlines says it has a reason for making them. That reason: $4.3 billion.
Southwest CEO Bob Jordan said at a Bernstein conference on Thursday that the airline’s new bag fees, upcoming assigned seating policy, and continued cost cutting would make it $4.3 billion in earnings before interest and taxes next year. According to Jordan, $1 billion of that would come from revenue management improvements, $1.5 billion from assigned seating and extra legroom, $800 million from baggage fees, and another $1 billion from further cost cutting.
The math is something of a U-turn from eight months ago, when Southwest said that charging for bags would add up to $1.5 billion in revenue but ultimately result in $1.8 billion in lost market share.
