Southwest Airlines has reached a settlement with Elliott Investment Management, agreeing to a major board restructuring. The Dallas-based carrier announced this week that Chairman Gary Kelly and six board members will step down on November 1, making way for five Elliott-backed candidates and a former Chevron executive. This development marks the end of a protracted standoff, as Elliott had pushed for significant leadership changes to increase profits and stock value, although it fell short of ousting CEO Robert Jordan.
The shakeup occurs as Southwest reports a dramatic downturn in third-quarter earnings, with profits plunging almost two-thirds to $67 million. Increased labor and operational costs heavily impacted financial performance. Despite this, Southwest did surpass Wall Street expectations on adjusted earnings per share. CEO Robert Jordan emphasized the value of having board members with fresh airline expertise, boosting confidence in the company's strategic direction.
In tandem with the leadership overhaul, Southwest plans notable changes to boost revenue. Transformations include converting a substantial portion of seats to premium options, ending the flexible seating policy, and pursuing partnerships with international airlines, beginning with Icelandair. In the wake of intense competition on domestic routes, which led to price cuts and an overabundance of seats, Southwest aims to reduce its flight schedule by 4% in the fourth quarter. The airline also announced an expedited repurchase of $250 million in shares as part of its previous $2.5 billion buyback initiative. (This story was generated by Newser's AI chatbot. Source: the AP)
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