Fitch Ratings downgraded Southwest Airlines to a “negative” rating outlook from its previous stable rating on April 3, 2025.
The credit rating agency stated that Southwest may shift to a “less conservative capital allocation and financial policy”, while ongoing strategic changes have the potential to impact its competitive position relative to network carriers.
Fitch said it was “cautiously optimistic” about Southwest’s new policies, such as charging for checked bags and expiring flight credits, noting potential customer backlash and competitive disadvantages.
Earlier this month Southwest cut its guidance for the first quarter the year, citing a “greater impact from the California wildfires than originally estimated” along with lower government travel. In addition, the lowered unit revenue was driven by a higher-than-expected completion factor.
Unit revenue is expected to now be up 2-4% in the first quarter, down from its previous guidance of up 5-7%.