Southwest Airlines Boosts Q3 Revenue Forecast and Announces $2.5 Billion in Share Buybacks Amidst Elliott Management Pressure
Southwest Airlines has lifted its third-quarter revenue forecast, now expecting a unit revenue increase of up to 3% year-over-year, up from a previous projection of a decrease of up to 2%. The updated forecast partly stems from rebooking passengers affected by July’s CrowdStrike outage. In a bid to bolster investor confidence, the airline has also authorized $2.5 billion in share buybacks.
To strengthen its board and fend off activist investor Elliott Investment Management, Southwest is appointing Bob Fornaro, former CEO of Spirit Airlines and a long-time industry veteran, to its board of directors. Fornaro previously led AirTran, which Southwest acquired in 2011.
During an investor day presentation held at its Dallas headquarters, CEO Bob Jordan and other senior leaders outlined significant modifications to the airline’s business model. These changes include introducing assigned seating and extra-legroom options aimed at boosting revenue. The new seating configurations, expected to generate $1.7 billion in earnings by 2027, will debut in 2026 after gaining necessary FAA approvals.
Southwest remains committed to its policy of allowing customers to check two pieces of luggage for free, citing market share gains outweighing potential lost revenue from baggage fees. Due to delays from Boeing, including the uncertified 737 Max 7, the airline has reduced unprofitable routes previously better served by smaller aircraft.
In efforts to cut costs, Southwest plans to reduce its service in Atlanta next year, potentially impacting over 300 flight attendants and pilots. This announcement follows Executive Chairman and former CEO Gary Kelly’s decision to step down by the end of next year, amid Elliott’s calls for a leadership change.
Elliott Investment Management did not immediately comment on Southwest’s strategic presentation.
Original Story https://www.cnbc.com/2024/09/26/southwest-investor-day-proxy-battle-elliott.html
Category :
Tags:
