Southwest Airlines plans another major change

The budget airline has gone through major transitions in the last year.

Jun 9, 2025 - 17:24

Southwest Airlines plans another major change

While it has been a rough few years for almost all airlines, few have gone through as much change as Southwest Airlines (LUV) .

Throughout 2024, the Dallas-based budget carrier tiptoed around a proxy battle with major investor Elliott Investment Management. After purchasing enough stock to be able to call board votes, the hedge fund repeatedly called out CEO Bob Jordan’s "poor execution and leadership's stubborn unwillingness to evolve."

While Jordan was able to hold on to his spot at the helm, Elliott pushed forth a shake-up of the board and ouster of multiple executives like Chief Transformation Officer Ryan Green, as well as controversial changes to the passenger experience. These included the end of assigned seating and the two-bags-fly-free policy.

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With these cuts eliminating perks that made Southwest distinctive and retained loyal travelers, the airline now needs something else to make customers choose it over other low-cost airlines.

*Southwest announced a partnership with Icelandair in 2024.*
Image source: Shutterstock

Here is why analysts are predicting Southwest Iceland flights

In September 2024, Southwest struck a partnership with flagship carrier Icelandair, and at the start of June, it announced an interline agreement that would allow it to connect itineraries with China Airlines.

While the Icelandair partnership simply creates codeshare connectivity on routes that each airline runs under its name, some analysts believe Southwest is looking to launch its own flights to Reykjavik in the near future.

Airline route watchdog blog Enilria was the first to float the possibility of Iceland as a destination at the start of May. A TD Cowen investor report recently also told investors that it would be an attractive option for its loyalty program and partner credit card customers looking to apply their points toward a more exotic destination.

Southwest is trying to rebrand itself. Can an Iceland flight do that?

The first red-eye flights to several Hawaiian islands from Las Vegas and Phoenix that Southwest started running in 2024 were created specifically with the points customers in mind.

As the airline transitions its all-Boeing 737 (BA) fleet to include more of the modern MAX version, it also has a number of aircraft that can run the seven-hour flight to Reykjavik from a city like Dallas.

"After destroying their brand in an epic self-own, introducing unannounced new nickel and dime charges they’d said they wouldn’t, and imposing punitive changes on elite frequent flyers, the airline would love nothing more than to change the narrative," Gary Leff of aviation website View From The Wing writes. "Flying to Europe would help do this."

In an annual conference for investors across different industries at the end of May, Jordan said that there would be "no reveal" but that the airline was not ruling out some of the "hypothetical" things its customers would like.

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"For many of our folks that love Southwest, we can't do things — we can't provide products — that you want," Jordan said at the Bernstein Strategic Decisions Conference. "Like a first class. We can't get you to long-haul international destinations. If a lounge is important to you, we don't have a lounge."