Southwest Airlines raised its third-quarter revenue forecast, approved $2.5 billion in share buybacks and announced plans to buy back a large number of its businesses as it continues to face pressure from activist hedge fund Elliott Investment Management. announced changes.
The company says its business plan will generate an additional $4 billion in pre-interest and tax profits by 2027.
Southwest said it expects unit sales prices to increase by up to 3% year-on-year in the third quarter, exceeding the previous forecast for a 2% decline.
Summer travel contributed to the revenue revision, including the rebooking of passengers who originally purchased tickets on airlines affected by the July CrowdStrike outage.
The company also announced that Bob Fornaro, who previously served as chief executive officer at Spirit Airlines and subsequently joined the company's board of directors, will join its board of directors.
Fornaro was AirTran's CEO from 2007 until 2011, when Southwest Airlines acquired the low-cost airline.
He then served as a consultant for Southwest Corporation.
“Bob is an exceptional leader and brings a wealth of industry experience to our board,” Chairman Gary Kelly said in a statement. “As a former Southwest consultant, Bob has provided an objective review and critical perspective on Southwest’s transformation plans.”
Fornaro's appointment followed criticism from Elliott, the activist hedge fund led by billionaire investor Paul Singer, that Southwest's board members lacked industry expertise. It is something.
Southwest Airlines executives are announcing plans for the airline's future during an investor presentation Thursday at the company's Dallas headquarters.
The presentation came amid mounting pressure from Elliott to make fundamental changes to the airline's top leadership.
Hedge funds are specifically targeting CEO Bob Jordan and Mr. Kelly, who served as CEO before Jordan.
Southwest Airlines announced in early September that Mr. Kelly had agreed to retire after next year's annual meeting, but that Mr. Jordan would continue in his role.
Elliott later said he still wanted a change in leadership at the top.
Hedge funds continued to blame Jordan for the airline's poor performance.
Southwest has already unveiled changes to its business aimed at fending off Elliott's inroads.
Over the summer, the company announced it would introduce reserved seats and seats with extra legroom, a first in its nearly 60-year history.
But the company said Thursday it is sticking with its free bag-checking policy, saying it is “generating market share gains that outweigh the potential revenue loss from baggage fees.”
On Wednesday, Southwest Airlines told its staff it would cut flights to and from Atlanta's Hartsfield-Jackson International Airport, the world's busiest airport. According to a company memo Obtained by CNBC.
The airline will cut 300 pilot and flight attendant positions serving the region to cut costs, according to the memo.
