Southwest Airlines Soars to Four-Year High as Era of 'Open Seating' Comes to a Close
Southwest Airlines (NYSE: LUV) shares climbed to their highest level in four years on Thursday, closing up 18.7% at $48.50. The rally was fueled by investor optimism following the airline's formal shift away from its iconic open seating model to assigned seating, a fundamental change to its customer experience and revenue strategy.
The stock reached an intraday high of $49.12 before settling. The dramatic uptick follows the company's latest earnings announcement, which detailed the rollout of assigned and extra-legroom seating options. This ends a 54-year tradition that had defined the low-cost carrier's brand but limited its ancillary revenue potential.
"Just yesterday, assigned extra legroom seating became operational, and Southwest expects earnings upside based on how booking behavior related to these initiatives unfolds," the company stated during its earnings call.
Financially, Southwest reported a mixed 2025. Full-year net income saw a slight dip of 5.2% to $441 million, despite a 2.1% rise in total operating revenue to $28.06 billion. However, the fourth quarter showed robust momentum, with net income jumping 23.7% to $323 million and revenue growing 7.4% to $7.4 billion.
President and CEO Bob Jordan framed the changes as part of a broader transformation. "Southwest closed 2025 with strong momentum," Jordan said. "Last year, we implemented the most ambitious transformation in company history... That foundation positions us well for long-term success and sets the stage for significant earnings growth this year."
The strategic overhaul includes new baggage fees, basic economy fares, an optimized loyalty program, and expanded online distribution—marking a decisive pivot for the airline known for its single-class, no-frills approach.
Passenger Reactions: A Divided Cabin
The historic policy shift has sparked strong reactions from frequent flyers.
Michael R., a business traveler from Dallas: "Finally. The mad dash at boarding was stressful and inefficient. Assigned seating brings Southwest in line with the rest of the industry and makes planning a trip much simpler. This is a smart, overdue move for growth."
Sarah Chen, a marketing manager and longtime Southwest loyalist from San Diego: "I'm heartbroken. The open seating was part of the charm and culture—it felt different and more communal. Now it's just another airline chasing every last dollar. They're sacrificing their soul for margin points."
David Porter, a retired teacher from Chicago: "I see both sides. I'll miss the casual feel, but as I get older, the guarantee of not having to fight for a decent seat or sit apart from my wife is worth a few extra dollars. If the operational reliability improves, that's a win for everyone."
Lisa Gonzalez, an aviation industry analyst: "The market's reaction is a clear verdict. This isn't just about seating; it's about Southwest unlocking a proven, high-margin revenue stream that it has left on the table for decades. In a competitive landscape, this evolution is necessary for long-term shareholder value."