Southwest Airlines boss warns 'difficult decisions coming' for ailing carrier - with its biggest perk in doubt

Southwest Airlines has warned that it will have to make some 'difficult decisions' in coming days under a plan to restore profits.

The announcement, sent to employees Thursday, comes as the future of the airline's 'bags fly free' perk remains uncertain - after allowing customers no charges for baggage for more than 50 years.

The perk was previously bolstered by other passenger-friendly policies like open seating, which were recently lost as the carrier attempts to fend off changes demanded by activist Elliott Investment Management.

Seemingly insufficient, Chief Operating Officer Andrew Watterson reportedly told employees in a video that the worst has still yet to come.

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'There are some difficult decisions coming as well,' Watterson said, Bloomberg reported Saturday

'Not city closures,' the C-suite staffer continued.

 'But you know, bigger changes for some cities.

'I apologize in advance if you as an individual are affected by it,' he added, not offering specifics, saying only that Southwest will release a revised flight schedule on Wednesday that should include the changes.

In a statement explaining the video, Southwest said it was part of a regular series of explanatory presentations the COO sends to staffers.

Meanwhile, the day after the new schedule is set to be sent out, the carrier is [posed to detail changes already made to drive up profits aside from changes to its route and flight network.

This includes the introduction of assigned seats, after more than a half-century of freeform seating that had set Southwest apart from the pack.

The new steps will be announced during an investor day in Dallas, as investors like Elliott fight to oust CEO Bob Jordan and instill a new board with its own nominees.

'We're trying to get more out of what we already have, but getting our costs under control is not going to be enough,' Watterson reportedly told employees this past Thursday.

'[B]ecause we're not going to do this on the back of employees or customers.

'[I]t has to be on the revenue side that we make the traction to get our profitability and equation balanced.'

Elliott, one of the airline's biggest investors, has claimed the company's business model has failed to address shifting demands in the consumer sphere for more premium products.   

Bonuses like the 'bags fly free' perk and open seating that are indelibly linked with the airline's image appeared to be part of the firm's concerns, as the carrier has also changed its ads to reach younger consumers.

This comes in response to seats being left vacant since the pandemic, in part by business people who are not traveling as much as they used to.

Elliott has said Jordan and Southwest's soon to be former Chairman Gary Kelly have refused to adapt the airline's business model, hence the recent changes after Kelly stepped down on September 10.

In a statement, Southwest said Kelly will relinquish his position come the carrier's annual meeting next spring. 

The airline added that six of its remaining 14 directors will resign after the November board meeting, but did not specify whom.

The company will name four new independent directors to take their place, with board member Jordan's fate also uncertain.

A report out earlier this year showed how airlines including Delta, United and American pocketed a staggering $33.3 billion from just baggage fees last year - a sharp 15 percent rise from $29 billion in 2022.

This sum is solely made up of fees from larger carry-on bags, standard checked baggage fees, and fines for overweight or extra large checked bags and accounted for 4.1 percent of global airline revenue last year.