Southwest Airlines eyes long-haul flights in strategic overhaul

By Rajesh Kumar Singh

CHICAGO, Sept 11 (Reuters) - Southwest Airlines LUV.N CEO Bob Jordan said on Thursday the company is looking at long-haul international flights and premium airport lounges as part of its turnaround strategy.

Jordan said while the company will have to look at a wide-body aircraft for long-haul international service, it could use a "more risk-tolerant" approach at first and choose a narrow body to serve those routes.

The Dallas-based carrier, which operates mostly domestic flights with a fleet of Boeing 737 jets, has been struggling to find its footing after the COVID-19 pandemic. Its lackluster earnings have fueled pressure to revamp its business model.

It has begun charging customers for checked bags, ending a free policy. It has also rolled out a new basic-economy fare and would switch to a new assigned seat policy in January, replacing its previous open seating model.

In the past, Jordan has talked of the company's aspirations to launch flights to Europe. Industry experts say a lack of long-haul international flights limits Southwest's appeal to customers and has deprived the airline of a high-margin revenue stream.

Since February, Southwest has launched partnerships with foreign carriers Icelandair, China Airlines, and EVA Air to broaden its network. The company has said it is exploring new partnerships from all parts of the globe.

But Jordan said the company wants to serve long-haul international routes itself. "We want to serve those destinations as well," he told a Morgan Stanley conference, adding the plans were still in the initial stages.

Southwest once boasted a record 47 consecutive years of profit prior to the pandemic. Since then, it has struggled to regain sustained profitability. Its margins currently pale in comparison with those of rivals Delta DAL.N and United Airlines UAL.O.

Many of Southwest's recent pivots are aimed at wooing high-spending travelers. Jordan said the company ends up losing customers to other carriers because it currently does not fly to destinations like London or have premium airport lounges.

He said the lounges are also expected to drive up the company's loyalty revenue as they would make its co-branded credit cards more attractive to customers.

"If we're going to continue to drive relevance, even as the largest domestic carrier, we've got to continue to meet the needs of our customers," Jordan said.