Southwest Airlines could be heading for a leadership uphaul as activist investment firm Elliott Investment Management (Elliot) begins to push for changes after building an almost $2bn stake in the company.
While neither company has publicly spoken on the issue yet, reporting from the Wall Street Journal stated that Elliott wants to overhaul Southwest’s leadership to improve its financial performance and is planning to engage with the management team.
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News of Elliott’s interest in shaking up the Texas-based Airline comes at a critical time for Southwest, which has struggled to capitalise on post-pandemic passenger growth despite a 47-year run of reporting profits before 2020.
The airline recently reported “disappointing” losses for Q1 2024 as operating expenses rose significantly and blamed aircraft delivery delays from Boeing for its issues, with fewer of its ageing aircraft able to be retired.
Southwest has also faced a number of reputational issues in the last few years as well, receiving a $140m fine from the US Department of Transportation for its handling of mass cancellations during huge storms over the festive period in 2022, which saw 2 million people stranded at airports.
More recently, the airline severely delayed more than 1,000 flights in May after a power outage hit its data centre in Dallas, Texas and forced a system restart.
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By GlobalDataWhile Elliott’s exact vision for the company has not been disclosed, it could see the end of CEO Bob Jordan’s time at the helm of the airline only two years after stepping into the role in February 2022, when he took over from Gary Kelly who had overseen Southwest for 17 years and remains executive chairman.
The activist investor has previous form in replacing CEOs of the companies it invests in, including Crown Castle, NRG Energy, Goodyear Tire & Rubber, and bookstore Barnes & Noble.
