DALLAS — Southwest Airlines reported a quarterly operating profit of $330 million for the quarter ending in March, marking its first operating profit since 2023. The company also announced a net income of $227 million for the same quarter.

This financial performance follows the implementation of several operational changes on January 27, including assigned seating, new boarding groups, bag fees, and extra legroom options. Southwest CEO Bob Jordan stated that internal research indicated 80% of customers desired assigned seating, and 88% of individuals who chose not to fly Southwest cited the absence of assigned seating as their reason.

On the first day of operations under the new system, Southwest led the industry in on-time performance and had the lowest number of cancellations, according to Jordan. He added, "And the first day of operation, we led the industry in on-time performance, and we led the industry in the lowest number of cancels. So we beat the industry on the day we changed everything about how the company operates."

Southwest's quarterly revenue reached $7.25 billion for the quarter ending in March, representing a nearly 13% increase from the previous year. In the same quarter of the previous year, the company had reported an operating loss of $223 million and a net loss of $149 million. The operating margin for the recent quarter was 4.6%, compared to a negative 3.5% in the prior year's same quarter.

The company's business revenue increased 25% year over year in March, and Rapid Rewards enrollments saw a 37% increase in the first quarter. Customer satisfaction scores for elite tier customers exceeded 90%. The share of Southwest passengers purchasing add-ons, such as preferred seats, increased from under 20% to 60%.

Morgan Stanley issued a research note on June 30, following meetings with Southwest Chief Financial Officer Tom Doxey and investor relations lead Danielle Collins. Morgan Stanley maintained an overweight rating on Southwest Airlines stock and set a price target of $60. Southwest Airlines shares closed at $50.25 on July 2.

Southwest also adjusted its capacity, reducing operations at Chicago O'Hare and Washington Dulles airports while increasing capacity in the Orlando, Las Vegas, San Diego, and Austin markets. The company's operating cash flow for the quarter ending in March was $1.42 billion.