Southwest Airlines Stock Rises as Firm Eyes More International Routes

Southwest Airlines (NYSE: LUV) shares rose 3.08% to $32.26 on Wednesday as the budget carrier announced plans to significantly expand its international reach, requesting permission from the Department of Transportation to serve over 100 new countries.

Southwest Asks Permission to Serve Over 123 Markets Worldwide Amid Business Model Overhaul

Southwest asked regulators on Tuesday for permission to serve any country with an Open Skies agreement with the United States, potentially opening doors to 123 markets worldwide. Currently, Southwest’s international footprint is limited to 10 countries, primarily in Mexico, Central America, and the Caribbean.

The filing represents the latest move in Southwest’s ongoing business model overhaul. A company spokesperson told Reuters the application was “not necessarily indicative of anything forthcoming,” but rather taking advantage of streamlined regulatory procedures. However, the timing aligns with other recent strategic pivots as the carrier works to improve profitability.

Southwest has already begun establishing a European presence through an interline agreement with Icelandair launched in February 2025, allowing passengers to book connected itineraries to European destinations via Reykjavík. The airline’s fleet of Boeing 737 aircraft (NYSE: BA), with a maximum range of approximately 4,370 miles, could handle shorter transatlantic routes without requiring new aircraft types.

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Southwest Shares Gain in Today’s Trading Session

Investors responded positively to the international expansion news, pushing Southwest shares up $0.97 to $32.26 in morning trading. The stock has gained 17.40% over the past year, outperforming the S&P 500’s 12.22% increase during the same period, though it remains down 3.49% year-to-date.

The airline faces mounting pressure to generate additional revenue streams amid industry-wide challenges, including increased fuel and labor costs. In response, Southwest has abandoned several longstanding policies that once differentiated it from competitors.

Last July, the company announced plans to end its signature unassigned seating model in favor of premium options with extra legroom. More recently, it reversed course on its “bags fly free” policy, introducing checked baggage fees in March 2025.

Southwest is scheduled to report its next quarterly earnings between July 23-28, with analysts forecasting EPS of $0.51. The consensus price target stands at $28.79, suggesting the stock may be currently trading above what many analysts consider fair value. The carrier maintains a modest dividend yield of 2.30% with a forward annual payout of $0.72 per share.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.