Southwest CEO Declares US Airline Industry Already in Recession

Southwest Airlines CEO Bob Jordan believes the US airline industry is already in a recession due to a significant drop in demand for domestic leisure travel. The airline expects a 6% decline in Q2 revenue, following a 3% decline in Q1. Jordan notes that consumers can immediately stop spending when they're uncertain, and the lack of economic clarity has made it impossible to accurately forecast travel demand and pricing for the rest of 2025.

Southwest Airlines has revised its financial outlook for 2025 and 2026, citing a significant drop in demand for domestic leisure travel and broader economic uncertainty. The airline reported a net loss of $149 million for the first quarter of 2025, despite record-breaking operating revenues of $6.4 billion. This performance was driven by all-time high yields and strategic revenue management, but was impacted by softening demand, particularly in domestic leisure travel.

The airline has reduced its capacity by 1.9% year-over-year and adjusted its fleet, adding 11 Boeing 737-8 aircraft while retiring 14 older planes. Southwest's President, CEO, and Vice Chairman, Bob Jordan, emphasized the airline's commitment to its transformation plan and cost reduction goals. Jordan noted that the airline's initiatives, such as launching Expedia as a new distribution channel and optimizing its loyalty program, aim to enhance customer experience and drive financial performance.

Southwest expects unit revenues to range from flat to down 4% year-over-year for the second quarter of 2025, with capacity increasing by 1% to 2%. The airline has paused its financial outlook for the next two years, citing recent and short-lived booking trends. Southwest joins other major airlines, such as United, Delta, and Alaska Airlines, in cutting flights and scrapping forecasts.

The airline's CEO, Bob Jordan, believes the US airline industry is already in a recession due to a significant drop in demand for domestic leisure travel. He expects a 6% decline in Q2 revenue, following a 3% decline in Q1. Jordan notes that consumers can immediately stop spending when they're uncertain, and the lack of economic clarity has made it impossible to accurately forecast travel demand and pricing for the rest of 2025.

Southwest continues to invest in its balance sheet and aircraft order book with Boeing, and it remains committed to controlling costs and executing its plans effectively. The airline's ongoing transformation aims to modernize its offerings while preserving its signature hospitality.

References:
[1] Southwest Airlines drops forecast amid softening leisure travel demand
[2] Southwest Airlines slashes flight schedule, suspends outlook citing economic uncertainty