• Morgan Stanley maintains an "Overweight" rating for Southwest Airlines (NYSE:LUV), raising the price target from $50 to $55.
• The introduction of assigned seating is forecasted to increase profits fourfold, leading to a significant surge in stock prices.
• Operational changes, including extra legroom options and varied fare choices, are expected to enhance customer experience and drive revenue growth.

Southwest Airlines (NYSE:LUV) is a major American airline known for its low-cost, no-frills service. It has been a significant player in the airline industry since its inception in the 1970s. The company has traditionally operated with an open seating policy, allowing passengers to choose their seats upon boarding. However, Southwest has recently made a strategic shift to assigned seating, a move that has sparked both customer and investor interest.

On January 29, 2026, Morgan Stanley maintained its "Overweight" rating for Southwest Airlines, with the stock price at $48.44. The investment bank also raised its price target for LUV from $50 to $55. This decision reflects confidence in the airline's recent strategic changes and its potential for future growth. The shift to assigned seating has been a significant factor in this positive outlook.

The introduction of assigned seating has led to a forecasted fourfold increase in profits for Southwest Airlines. This change has been well-received by investors, resulting in a surge in the company's share prices. On a recent Thursday, LUV's stock surged over 15%, marking its most significant rise in 17 years. This increase is attributed to investor enthusiasm about the new seating policy and the potential for upselling opportunities.

Southwest Airlines CEO Bob Jordan has highlighted the positive momentum generated by the transition to assigned seating. The airline has also introduced extra legroom options and varied fare choices, which are expected to enhance customer experience and drive revenue growth. These changes represent the largest operational shift in the company's history and have positioned Southwest for a strong performance in 2026.

Currently, LUV's stock is priced at $48.43, reflecting an 18.53% increase with a change of $7.57. The stock has fluctuated between a low of $42.68 and a high of $49.12 today, with the latter marking its highest price over the past year. The lowest price for the year was $23.82. Southwest Airlines has a market capitalization of approximately $25.05 billion, and the trading volume for the day is 30.97 million shares.