Southwest Airlines posted better-than-expected second-quarter financial results on Thursday, furthermore announcing a shift in its business model. The U.S. airline explained that it would be introducing assigned seating as well as premium seating options to its fleet cabins.
The U.S. carrier’s second-quarter adjusted profit came in at 58 cents per share, thereby beating market estimates of 51 cents per share according to LSEG data. The airline reported a total operating revenue of $7.35 billion for the quarter, beating Wall Street estimates of $7.32 billion.
Southwest’s positive earnings update comes amid a U.S. summer travel boom, with over three million air passengers passing through U.S. airport security checkpoints on July 7. This trend has largely driven local carriers to increase seating capacity for the domestic market, thereby pouncing on the opportunity for increased passengers during this peak period.
Demand for premium seating has also risen, with local competitor Delta Air Lines reporting a double-digit increase in premium seating purchases during the second quarter. As a result, Southwest’s decision to embrace its new business model appears to have come at an opportune time. The U.S. carrier added that costs for the quarter were better than expected, thereby contributing to a bright financial outlook.