Southwest scraps open seating, adds premium fares

STORY: Southwest Airlines announced sweeping changes on Thursday, saying it will scrap its hallmark open seating plan in favor of assigned seats.

The low-cost carrier, which offers economy class only, will also sell premium seats with extra legroom.

The changes come as the airline faces pressure from an activist investor to improve its financial results.

Revenue has taken a hit in recent quarters amid an industry-wide oversupply of seats on domestic flights, forcing airlines to lower prices.

Delays in plane deliveries from Boeing have worsened the situation for Southwest.

And next quarter's outlook isn't much better. Southwest said it expects revenue to be flat at best, while non-fuel operating costs are estimated to be up by double digits.

Activist investor Elliott Investment Management is pushing for leadership changes - saying the company needs fresh perspectives to compete in the modern airline industry - and has warned of a proxy fight.

As for the new seating plan, Southwest said the proposed cabin layout will require approvals from the U.S. Federal Aviation Administration and is expected to be available for bookings in 2025.