This article was originally published on Washington times - National. You can read the original article HERE
Southwest Airlines will revamp its board and the chairman will retire next year, but it intends to keep CEO Robert Jordan after a meeting with hedge fund Elliott Investment Management, which has sought a leadership shakeup at the airline including Jordan’s ouster.
Southwest said Tuesday that six directors will leave the board in November and it plans to appoint four new ones, who could include candidates put forward by Elliott.
Shares of Southwest Airlines Co. rose slightly before the opening bell Tuesday.
Elliott, the fund led by billionaire investor Paul Singer, has built a 10% stake in recent weeks and advocated changes it says will improve Southwest’s financial performance and stock price. The two sides met Monday.
Elliott blames Southwest’s management for the airline’s stock price dropping by more than half over three years. The hedge fund wants to replace Jordan , who has been CEO since early 2022, and Chairman Gary Kelly, the airline’s previous chief executive. Southwest said Tuesday that Kelly has agreed to retire after the company’s annual meeting next year.
Elliott argues that Southwest leaders haven’t adapted to changes in customers’ preferences and failed to modernize Southwest’s technology, contributing to massive flight cancellations in December 2022. That breakdown cost the airline more than $1 billion.
Southwest has improved its operations, and its cancellation rate since the start of 2023 is slightly lower than industry average and better than chief rivals United, American and Delta, according to FlightAware. However, Southwest planes have been involved in a series of troubling incidents this year, including a flight that came within 400 feet of crashing into the Pacific Ocean, leading the Federal Aviation Administration to increase its oversight of the airline.
Southwest was a profit machine for its first 50 years — it never suffered a full-year loss until the pandemic crushed air travel in 2020.
Since then, Southwest has been more profitable than American Airlines but far less so than Delta Air Lines and United Airlines. Through June, Southwest’s operating margin in the previous 12 months was slightly negative compared with 10.3% at Delta, 8.8% at United and 5.3% at American, according to FactSet.
This article was originally published by Washington times - National. We only curate news from sources that align with the core values of our intended conservative audience. If you like the news you read here we encourage you to utilize the original sources for even more great news and opinions you can trust!
Comments