Jack Otter and panelists join “Barron's Roundtable” to discuss Southwest Airlines' decline in popularity and how to turn it around.
Southwest Airlines has warned employees that “difficult decisions” are looming amid pressure from activist investor Elliott Investment Management to boost profits.
The Dallas-based airline's chief operating officer, Andrew Watterson, said in a video to employees on Sept. 19 that the strategy the airline will soon announce will include changes to its routes and flight network, Bloomberg reported. Reportedciting records.
“We have some tough decisions ahead,” he said, telling staff that “bigger changes” are on the way for some cities that “are not just about closing cities.”
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“We are trying to get more out of what we have, but it's not enough to just contain costs, because we're not going to do this at the expense of our employees or our customers. So to balance profitability, we need to have traction on the revenue side,” he was quoted as saying by the media.
A ramp attendant loads baggage onto a Southwest Airlines Boeing 737-800 at Baltimore-Washington Airport in Maryland. (Angus Mordaunt/via Bloomberg/Getty Images)
FOX Business has reached out to Southwest Airlines for comment.
The comments came amid an ongoing activist investor challenge from Elliott Investment Management, which has proposed a number of reforms to improve Southwest's performance, and ahead of the airline's investor day on Sept. 26.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| i love you | Southwest Airlines | 29.04 | +0.10 |
+0.35% |
The first big change came in early September, when Chairman Gary Kelly announced plans to step down next year. Southwest also announced that six other members of its board of directors would step down in November.
Kelly previously said the airline is “pursuing meaningful strategic changes to our route network, revenue management techniques, marketing, merchandising and distribution approaches” and has been conducting an “in-depth” analysis of its strategy since last year.
A Southwest Airlines plane takes off from Las Vegas International Airport in Nevada, February 8, 2024. (Mike Blake/File Photo/Reuters Photo)
Southwest has announced that it will begin offering assigned seats this summer and premium seating options in the future, and it also plans to begin offering overnight flights next year.
Southwest said at an investor meeting in July that it would “provide more details about our comprehensive plans to deliver transformational commercial initiatives, improve operational efficiencies and capital allocation discipline.”
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The airline generated operating revenue of $7.35 billion in the second quarter, up 4.5% from the same period last year. Quarterly net income fell 46% from a year ago to $367 million.
Southwest Airlines has announced that it will begin offering reserved seats and premium seating options this summer. (Adobe Stock/Fox News)
More than 137 million passengers flew on the airline last year.
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FOX Business' Daniella Genovese contributed to this report.
