Southwest Airlines details plans to fight off activist investor Elliott Management
Southwest Airlines is launching a new plan to return the carrier to profitability and has added a new director to its board, amid an ongoing battle with activist investor Elliott Investment Management.
Ahead of Southwest’s investor day Thursday, the Dallas-based airline unveiled a three-year plan to transform its business model. Some of the air carrier’s new initiatives include: assigned seating, premium seating options, boarding changes, global airline partnerships, vacation packages and updates to its rewards program. Just this week, Elliott had announced it would launch a proxy fight “as soon as next week” in an effort to ignite a fire under Southwest leadership ahead of a meeting with shareholders.
“We’re now ushering in a new era at Southwest, moving swiftly and deliberately to transform the company by elevating the customer experience, improving financial performance and driving sustainable shareholder value,” said Bob Jordan, Southwest CEO.
One thing Southwest remains firm on is that bags will still fly free. Many of Southwest’s customers signal that not paying for the first two checked bags is one of the main reasons for frequently flying the airline.
Southwest will also focus on cost savings. Some initiatives include: minimizing hiring, optimizing scheduling efficiency, capitalizing on supply chain opportunities and improving corporate efficiency.
This week, Southwest announced it would cut down on its presence at Hartsfield-Jackson Atlanta International Airport, displacing employees based at the busiest airport in the world based on passenger traffic.
It’s also modernizing its fleet of all Boeing 737 jets with a goal of reaching an average fleet age of five years in 2031.
Another change includes appointing Robert Fornaro, former CEO of Spirit Airlines to the board of directors, an airline executive with four decades of experience. Fornaro was a consultant to Southwest from 2011 to 2014 following its acquisition of AirTran in 2011, and again from 2020 to 2024 following his resignation as president and CEO of Spirit.
The announcement comes after Southwest said seven directors would retire from the board, including executive chairman and longtime leader Gary Kelly. Elliott had pushed for 10 candidates to the board, but Southwest has vocalized it will only consider up to three of its candidates.