DALLAS — Southwest CEO Bob Jordan said the emergence of an activist investor was a weekend surprise.
“We got a notice on a Sunday night that they were in our stock, they were going to post a website the next morning, and there was a Wall Street Journal story,” Jordan revealed at an aviation conference in Dallas. “It happened very quickly.”
Elliott Investment Management put forth a set of demands that led to an overhaul of the Dallas-based airline’s board and changes that Jordan says he believes will lead Southwest back to profitability.
While the process was “stressful” and “tough,” ultimately the airline and Elliott got to a good place, Jordan said.
“What I’m happy about is that chapter is closed,” he said.
“While activism is viewed as a negative because it creates a lot of activity for your company and you're in the news - and not generally positively - at the end of the day we did drive a lot of very positive changes.”
Jordan spoke at the Skift Aviation Forum at the Statler Hotel in Dallas, where top leaders in aviation offered a view of where the industry stands.
Brian Sumers, founder and editor of The Airline Observer, moderated the discussion with Jordan.
“One demand that these investors had was that you were supposed to go, and you are still here,” Sumers said.
Former CEO and executive chairman Gary Kelly did step down, but Jordan survived.
Jordan said he did not read articles pushing for his ouster and tried to stay focused on feedback from all shareholders, who agreed that a board refresh was necessary.
Nine new board members joined Southwest since May, five of those are coming on as part of the Elliott agreement, Jordan said.
Jordan said Elliott’s influence is not the reason the airline revealed sweeping changes this summer, like assigned seating, more legroom in certain areas, and red-eye flights.
“The plan was not developed because of Elliott. The plan was developed because we owe all of our shareholders better financial performance and we will do that,” Jordan said.
The entire industry suffered a major downturn during the COVID pandemic, but Southwest also experienced a major meltdown in December 2022 that led to almost two million passengers being stranded.
A resulting investment in technology and winter weather operations systems is working, Southwest COO Andrew Watterson told WFAA.
“We briefly became infamous for canceling flights in December 2022. And this year we have the least canceled flights of any U.S. airline,” Watterson said. “So, we definitely have tackled our problems with winter weather and reliability. And now we're turning all of our efforts from winter operations to improving profitability.”
Jordan expressed confidence in the airline’s future.
“I can assure you with, especially with this transformational plan that we announced that Investor Day, Southwest Airlines will return to industry-leading profitability.”
“My whole focus is on all eyes forward, executing our plan for the goodness of our people, our customers and our shareholders.”