Southwest CEO guarantees change as activist Elliott pushes for brand new leadership

Southwest Airlines CEO Bob Jordan said the corporate is able to adapt to changing customer trends resembling premium seating as pressure from an activist investor increases.

“We will adapt as our customers’ needs adapt,” Jordan said Wednesday at a Politico industry event.

Jordan's comments got here two days after hedge fund Elliott Management announced a $1.9 billion stake in Southwest and said the airline needed a brand new CEO and chairman.

In April, Jordan told investors that the airline was considering major changes to its product, possibly abandoning the unassigned seating system that has made the Dallas-based carrier a standout, and reconsidering the introduction of a single class of service.

Jordan reiterated those thoughts on Wednesday, saying the airline, which began operations in 1971 and now carries more passengers within the United States than another, is in its “third generation.” He said the airline’s leadership is open to major changes to extend revenue while rivals resembling delta And United Take advantage of shoppers who’re willing to pay more for a seat with more room or other advantages.

Elliott didn’t immediately reply to a request for comment on Jordan's remarks on Wednesday.

In response to the activist campaign, Southwest said on Monday that its board supports the airline's management and strategy and “looks forward to further discussions with Elliott.”

Southwest is fighting weaker margins than a few of its rivals because the airline faces increased capability within the U.S., changing travel patterns after the pandemic and a growing problem beyond its control: delays in deliveries of latest planes from Boeing, its sole aircraft supplier, as the corporate grapples with multiple production and safety crises. The airline expects to receive just 20 Max jets from Boeing this yr, in comparison with an earlier forecast of nearly 80 recent planes.

Southwest also took months to get back on its feet after an outage at the top of the 2022 holiday season cost the corporate greater than $1 billion. The company later admitted that its technology couldn’t handle the a whole lot of flight and crew changes that were triggered was damaged by a winter storm, prompting the corporate to quickly modernize its system.

Meanwhile, Jordan said Southwest continues to work to enhance the client experience. The company has upgraded its in-flight Wi-Fi and installed power outlets across its fleet of Boeing 737s in recent times.

“I think customer preferences go beyond that,” Jordan said Wednesday. The airline has spent months surveying customers to seek out out what changes are vital, he added.

“It has been several years since we last looked at this in depth, and customer preferences and expectations change over time,” an airline spokeswoman told CNBC. “We are also examining the operational and financial benefits of any potential change.”

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