A Southwest Airlines plane takes off from Hollywood Burbank Airport as another Southwest Airlines plane taxis by, in Burbank, California, on July 25, 2024.
Mario Tama | Getty Images
Southwest Airlines The company on Thursday raised its third-quarter earnings outlook, announced that its board had authorized $2.5 billion in share buybacks and detailed a series of changes to its business model to counter activist Elliott Investment Management.
The company said it now expects third-quarter unit revenue to grow as much as 3 percent compared to the same period last year, up from a previous forecast of a decline of as much as 2 percent.
The company also has a long history of working with respected industry veterans, including Spirit AirlinesFornaro’s association with Southwest dates back more than a decade. He served as CEO of AirTran Airways, the airline Southwest merged with in 2011, and after the merger he served as a consultant to Southwest.
Southwest executives laid out their vision for the airline’s future in a presentation to investors at the airline’s headquarters in Dallas on Thursday. Chief Executive Officer Bob Jordan and other Southwest executives come as they face increasing pressure from Elliott, who is seeking changes at the airline’s management.
Southwest executives will be trying to convince investors that they’re on the right path to boosting profits and revenue after the airline unveiled dramatic changes over the summer to its business model that’s been in place for more than half a century, including reserved seating and extra legroom, that could boost the airline’s revenue.
Southwest Airlines said in a presentation Thursday that it is sticking with its long-standing policy of allowing customers two free checked bags, which it says “generates market share gains that outweigh the potential revenue loss from baggage fees.”
A day earlier, Southwest Airlines told staff it would significantly cut service in Atlanta next year and potentially remove more than 300 flight attendants and pilots from the city as part of cost-cutting measures.
Earlier this month, Southwest’s board chairman and former CEO, Gary Kelly, announced his intention to step down by the end of next year. Elliott later told Southwest’s mechanics union he still wanted a change at the airline’s top brass. The company had no immediate comment on Southwest’s strategy presentation, released Thursday.
—CNBC’s Rohan Goswami contributed to this report.
