Southwest Airlines informs employees of impending tough choices to increase profits.

• The COO of Southwest Airlines informed employees that the airline will need to make "tough choices" to increase its profits.
• The airline has announced that it will implement assigned seating, begin offering red-eye flights, and sell seats with additional legroom.
• Activist Elliott Investment Management is pushing for a leadership change in the carrier.

The company has informed its employees that it may need to make "tough choices" in order to increase profits, as it is under pressure from activist Elliott Investment Management to make leadership changes.

Southwest over the summer announced significant alterations to its 50-year-old business model in an attempt to boost revenue. The airline will replace open seating with assigned seats, provide seats with extra legroom at a premium price, and introduce red-eye flights.

Last week, COO Andrew Watterson announced that the company has started listing its flights on both Flights and and has adjusted its advertisements to target a younger audience, in a video message to staff.

In the video, Watterson stated that while it is not enough, we also need to modify our network, as seen in the transcript viewed by CNBC.

"We are facing some challenging choices, but it's not about closing stations. We need to keep pushing forward to improve our financial situation," Watterson stated. "I'm sorry if this affects you personally."

The airline is considering reducing its presence in certain cities and may transfer staff to other locations to cut costs and focus on profitable flying, according to a source.

This year, other carriers have reduced their routes to allocate more aircraft to flights that generate higher revenue.

The investor day at Southwest's Dallas headquarters on Thursday will include more information about the airline's initiatives and route changes.

Earlier this month, Gary Kelly, the executive chairman and former CEO of Southwest Airlines, announced that he would step down after the company's shareholder meeting next year. Elliott has been pushing for a leadership change at the airline and has criticized Southwest management for not doing enough to improve the company's bottom line.

The View from the Wing industry blog first reported the video earlier. Southwest did not immediately respond to the staff message.