Will Assigned Seating and Extra Legroom Reshape the Value Proposition for Southwest Airlines (LUV)?

• Southwest Airlines recently kicked off its Week of WOW promotion, offering one-way fares starting as low as US$39 for travel through March 2026, along with discounts on vacation packages, car rentals, and opportunities for bonus Rapid Rewards points.
• In addition to travel deals, Southwest announced significant service enhancements, including free WiFi for Rapid Rewards Members and planned upgrades such as assigned seating and extra legroom options, aiming to expand appeal and elevate customer experience.
• We'll now look at how the introduction of assigned seating and extra legroom may alter Southwest Airlines' investment narrative.

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Southwest Airlines Investment Narrative Recap

To be a Southwest Airlines shareholder, one must have faith in the company’s ability to grow by transforming its customer experience and maintaining operational efficiency, even as the airline sector faces economic pressures and competitive pricing. The recent rollout of fare promotions with service enhancements could provide a near-term demand boost, but the most important short-term catalyst, successful uptake of new seating options and fare categories, remains unproven, while the biggest risk continues to be unpredictable travel demand.

Among Southwest’s announcements, the introduction of assigned and premium seating across all flights beginning January 27, 2026, is particularly relevant. This move aligns directly with Southwest’s strategy to offer more differentiated fare products that could potentially improve revenue yield and better meet varied customer needs, enhancing the company’s ability to address one of its most important catalysts. Despite this, investors should keep in mind the challenge that if consumer acceptance of these new fare types drops off or...

Read the full narrative on Southwest Airlines (it's free!)

Southwest Airlines is projected to reach $32.6 billion in revenue and $1.9 billion in earnings by 2028. This outlook assumes a 5.9% annual revenue growth rate and a $1.5 billion increase in earnings from $392.0 million today.

Uncover how Southwest Airlines' forecasts yield a $32.51 fair value, in line with its current price.

Exploring Other Perspectives

Eight community members on Simply Wall St estimated Southwest’s fair value between US$7.89 and US$45.91 per share. With new seating products coming soon, your opinion on future revenue impacts could differ greatly from others, so compare several views yourself.

Explore 8 other fair value estimates on Southwest Airlines - why the stock might be worth as much as 42% more than the current price!

Build Your Own Southwest Airlines Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Southwest Airlines research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Southwest Airlines research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Southwest Airlines' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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