DALLAS — It's been a whirlwind few months for Dallas-based Southwest Airlines, and the changes might be far from over.
As activist investor Elliott Investment Management plans to call a special board meeting to overhaul the company's leadership, Southwest officials on Thursday unveiled a detailed plan - "Southwest. Even Better." - that outlines "transformational" changes to the company over the next three years.
Several key changes were already known: Assigned and premium seating and the addition of redeye flights, for example.
But Southwest also announced plans for a new vacation package, changes to its Rapid Rewards program and partnerships with international airlines for an expanded flight network.
The plan was announced ahead of Southwest's Investor Day on Thursday. And it came with the backdrop of Southwest officials earlier this week accusing Elliott officials of "launching public ambushes" and "seeking to disrupt" Investor Day.
Elliott, which recently disclosed an 11% stake in Southwest (more than the 10% required to call a special meeting), has continued to push for leadership change in the company, despite the recent departures of six board members and company chairman Gary Kelly, a former Southwest CEO.
But current Southwest CEO Bob Jordan, also a target of Elliott, has not stepped down.
Jordan on Thursday touted the Southwest transformation plan as the company "ushering in a new era at Southwest" to improve its financial standing and shareholder value.
"Southwest's transformation is guided by data-driven research of travelers' changing needs and expectations," the company said in a news release. "Southwest's evolution will provide even more choices for its Customers and preserve aspects of the business that make the airline unique among its competitors."
Here are the changes (and one key thing not changing) listed in Thursday's announcement:
- Assigned seating: A departure from the company's open seating, this will roll out in the first half of 2026.
- Premium seating: Southwest doesn't have first-class offerings, but they now plan to have extra legroom options for about a third of its seats.
- Southwest boarding with upgrades: The airline "will evolve" the way it boards planes, though loyal customers and those who buy premium seating will still be among the first to board.
- Bags will continue to fly free: Another Southwest hallmark, the free bags policy isn't changing. Customers will still get two free checked bags.
- Global airline partnerships: Southwest plans to partner with international carriers, the first being Icelandair. The partnership will launch in 2025 through Baltimore-Washington International Airport.
- Getaways by Southwest: This is a new vacation package being launched in 2025, featuring customizable vacation bundles.
- Rapid Rewards enhancements: Rapid Rewards members will still earn points at the same rate they do now, but A-List and A-List Preferred Members will get added benefits.
- 24-hour operations/redeye flights: Starting in February 2025, Southwest will begin offering redeye flights in "key markets," a first for the company.
- Turn times between flights: Southwest plans to "further reduce" time between turning an aircraft.
Whether or how Southwest's plan impacts the ongoing fight with Elliott Investment Management remains to be seen.
Elliott's letter this week named Oct. 7 as a potential record date to ensure shareholders can vote on their shares.
“Southwest’s management and board have chosen a go-it-alone path with the goal of obstructing a leadership change that is urgently needed,” Elliott partner John Pike and portfolio manager Bobby Xu wrote in the letter. “This path has featured a chaotic series of defensive actions, including a ‘poison pill,’ a hastily recruited new director, a half-baked announcement of changes to the Company’s product, and the sudden declaration that nearly half of the Board intends to resign in November.”