Southwest could announce more major changes in the coming months, such as lounges, long-haul international flying and premium seats, CEO Bob Jordan said Thursday during the airline's Q3 earnings call.
"There's active work in terms of developing the next strategy. And I'm hopeful to be able to lay parts of that out early in 2026," he said.
Jordan didn't make any commitments on which changes Southwest will make next, but he briefly spoke about Southwest's consideration of lounges.
"We're looking at what our customers would want in a lounge and where those lounges would be located," Jordan said.
He said that long-haul flying, lounges and a premium seat would make the Rapid Rewards loyalty program and Southwest's co-branded credit cards more attractive and improve their revenue potential.
Southwest had already upended its business model this year, introducing checked-bag fees in May and opening reservations for assigned seats and extra-legroom seats in July for flights beginning Jan. 27.
It's still early in the booking curve for flights departing after Jan. 27, but Jordan said, "We're right on track with our expectations."
Southwest forecasts $1 billion in additional earnings before interest and taxes next year from sales of extra-legroom and preferred seats. COO Andrew Watterson said the airline is seeing a "knife edge" of yield improvement on bookings after Jan. 27.
Jordan said Southwest also expects annualized checked-bag revenue to be $1 billion. Checked-bag sales for this truncated year have remained on track with the carrier's July projection of $350 million.
Since implementing bag fees, Southwest has seen a 30% reduction in checked bags in the lobby and a modest increase in gate checks. The checked-bag rate, Watterson said, is in line with American, Delta and United.
Southwest turns $54M profit
For the third quarter, Southwest reported operating revenue of $6.95 billion, up 1% year over year and beating the consensus analyst forecast by $20 million, according to investment website Seeking Alpha. Operating expenses were $6.91 billion, up 1.2%.
Southwest's net income for the quarter was $54 million, down from $67 million a year ago.