Dallas Morning News Editorial, Mar. 15, 2025, thanks to Frank Wright
Shareholder pressure aside, corporate culture and a beloved brand actually do matter.
Southwest Airlines has always been really good at the clever bit. But lately, and with apologies to all of our Southwest friends and neighbors, we are sort of feeling like we wanna get away. After revoking two policies that were at the foundation of why people loved the little airline that could – no assigned seats and bags fly free – Southwest executives hoped that a little humor, always a trademark, could ease the sting.
“It’s not like we traded Luka,” the airline’s post read after its decision to revoke free-flying bags hit like a brick.
Well, yeah, Southwest, it sort of is like you traded Luka. That is Luka Doncic, formerly of the Dallas Mavericks and now of the (we still can’t believe it) Los Angeles Lakers, for anyone reading this editorial from a place where you can’t hear the wailing and gnashing of teeth echoing from 214, 972, 469 and 817 areas codes. We understand that Southwest is a public company and that delivering for the shareholders is the appropriate goal. But what set Southwest apart for so long was the ability to do its fiduciary duty while also creating a customer experience that was distinct from the corporate experience that too many leading airlines succumbed to eons ago.
Some serious missteps, some Southwest’s fault and some not, and the arrival of an activist investor ramped up the pressure to do what a lot of businesses do on the way to altering their mission and culture in ways that diminish what they are. And that’s what we are afraid might be happening at Southwest. The airline was underperforming financially relative to industry peers, and that gave leverage to change operations. But this was and remains a handsomely profitable airline with net income of $465 million last year on record revenue of $27.5 billion.
Cost pressures are relentless in the airline industry, and Southwest’s goal is to raise its operating margin from an estimated 3% to 5% this year to more than 10% in two years and its return on invested capital from an estimated 5% to 8% this year to better than 15%. But if the profit pressure spoils Southwest’s special corporate culture and the reason so many of us are deeply loyal to the airline, that’s a reason to worry.
People who love Southwest love it because it isn’t like the other guys. That’s something you can’t buy back when it’s gone. We felt that when Luka lifted off to LA. And we can’t help but feel that way today about Southwest.