Author Tim Ferris said forgiveness is the process of dropping off your emotional baggage.
Unfortunately, for Southwest Airlines (LUV) , when it comes to baggage — the kind that you travel with — forgiveness is in mighty short supply.
Earlier this month, the Dallas air carrier said it was scrubbing its extremely popular “two bags fly free” policy, which had been championed by Southwest’s founder, Herb Kelleher.
Customers who have a Southwest Airlines co-branded credit card can still get one bag for free, and customers in its top tiers of service and its top-tier loyalty program members will get one to two free checked bags.
The activist hedge fund and major Southwest shareholder Elliott Investment Management has been increasing pressure on the airline to boost profit.
Many commenters on X were clearly not feeling the luv as they unpacked a massive load of displeasure on the airline over the baggage fees.
Southwest did its best to respond.
Southwest CEO Bob Jordan has led the airline since 2022.
Getty/TheStreet
Southwest passengers express anger
“I used to choose Southwest because of the baggage fees and boarding. … Congratulations, my business is now open,” Sean Glynn said on March 11.
“While our policies are changing, our commitment to caring for our Customers remains the same. We still hope to see you onboard again soon, Sean,” the airline responded in a post signed by Kayla.
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“Not understanding your company’s entire MO is probably the most boneheaded thing I’ve ever seen from a CEO of any company,” JJrobb56 said. “The ENTIRE reason for picking Southwest is ‘well the tickets are more, but it evens out because bags are free.'”
“Good morning, JJ. Thank you for sharing your feedback with us. We know this update to our checked baggage policy is a big change for our Customers — we hear you and understand you’re disappointed,” Southwest said in a post signed by Jeni.
And under the heading of insult to injury, Frontier Airlines (ULCC) said customers could receive bundles including a seat assignment and a carry-on bag without an upcharge if they book Tuesday through March 24 for travel through Aug. 18.
“If your airline is treating you like an afterthought, maybe it’s time to file for divorce,” the budget airline said on March 18. “Frontier is here for the rebound — offering a fresh start with an unbeatable deal.”
Last year, Southwest said it was getting rid of its beloved 50-year-old open-seating policy as one of several steps to boost profitability.
In February, Southwest unveiled its first-ever mass layoff, cutting 15%, or about 1,750, of its corporate jobs, including senior leadership.
Southwest shares are up nearly 19% from a year ago and up 1.7% since January.
Analyst praise aggressive cost action
Investment firms issued research reports weighing in on Southwest’s cost-cutting measures.
UBS upgraded Southwest to neutral from sell with a price target of $36, up from $29, according to The Fly.
The company’s “increasingly assertive changes” bring the potential for improving financial performance despite the weaker cyclical backdrop facing the airlines, the investment firm said.
Southwest’s recent move to charge for bags shows it’s willing to do “whatever it takes” to improve its finances, UBS said.
Related: Southwest Airlines makes major change in key perk
The “aggressive” revenue and cost actions are the “right steps,” which should fatten profit margins and grow earnings, the firm said.
JP Morgan raised its price target on Southwest to $30 from $25 and affirmed an underweight rating. It was up in the air over the baggage issue.
The firm is “impressed” with the airline’s changes and says they’ll improve the earnings profile of both the carrier and the industry.
However, it sees “many questions,” estimating that roughly 20% of Southwest passengers will be exposed to bag fees. “The impact on passenger behavior is far from clear, not to mention the impact on Southwest operations,” JP Morgan said.
Melius Research upgraded Southwest to hold from sell, lifting its price target to $34 from $28.
After three years of Southwest underperforming its peers, 2025 appears to be a turning point for the airline in which self-help initiatives stabilize performance, the firm said.
Southwest has made significant strides to address many of its deficiencies and has a path to industry-plus revenue performance and potentially lower costs as well in 2025’s second half and beyond, Melius argued. LUV’s risk-reward profile is now more balanced, it said.
Southwest Airlines is scheduled to report Q1 earnings April 24.
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