Alaska Airlines and Southwest Airlines have become the latest US airlines to report weak short-term demand and predict that growth will slow down in the coming months.
Southwest said on April 23 that it had already begun trimming its network, along with plans to reduce passenger capacity later that year. Currently, passenger capacity is expected to increase by around 1% for the full year, presenting a photo of growth that is almost stagnant amid widespread economic uncertainty.
“Adjusting these incremental schedules is underway,” says Southwest.
Southwest reduced its first quarter loss to $149 million compared to the same three-month loss in 2024.
But that immediate outlook is pessimistic. Carriers expect a 1-2% increase in the second quarter from the previous year, as measured capacity at available seat kilomutres (1-2% increase in 2018, with revenue per seat kilometer available from April to June to 4%.
“With the current macroeconomic uncertainty, given the recent short-lived booking trends, it's difficult to predict,” says Southwest. “As a result, the company has not repeated its 2025 or 2026 EBIT (pre-interest and tax revenue) guide.”
Meanwhile, Alaska recorded a first-quarter loss of $166 million compared to a loss of $132 million in the same period last year, despite capacity measured beyond previously published expectations.
“Overall bookings are stable while we look forward to it, but our guidance reflects about six points of revenue impact on the second quarter due to the softer demand these days,” Alaska says.
However, the Seattle-based airline says it is likely to increase modestly by 2-3% in the second quarter, so growth is expected to slow. Looking further is a vague business.
“Given recent economic uncertainty and volatility, we are not providing an update on our full-year guidance for 2025,” Alaska says. “We are evaluating a variety of scenarios and expect solid profitability in 2025, even if revenue pressure is put under pressure throughout the second half of the year.”
Alaska and Southwest express their confidence in weathering an era of economic turmoil, claiming that Ben Minicic, CEO of Alaska Air Group, is “built for an era like this.”
Southwest says that in its broad financial transformation plan, which adopts several major operational and strategic changes, contributions from such initiatives will provide $1.8 billion in 2025 and $4.3 billion in 2026.
Southwest, for example, is well underway in introducing basic economy products and bag fees in May, and is expected to start selling seats allocated in the third quarter, and will eventually break into the “open” boarding process for that signature.
“Today, we are confident in the initiatives we outline and the value we expect to see them create,” says CEO Bob Jordan.
Southwest's downward financial forecast in the second half followed similar signals from US major airlines Delta and United, both warning that growth would slow down as they began the airline's revenue season. United will trim about 4% of its capacity from its domestic network in the second half.
Delta and United are, so far, the only US airlines reporting profitable first quarter.
Alaska and Southwest will hold a conference call on April 23rd to discuss their respective quarterly results with investors and analysts.
