Playing catch-up with Southwest: What happens after the Elliott settlement?

Skift Take

Southwest has had a tough time the past few months, but CEO Bob Jordan says he has a plan. Southwest’s experience may not be too different from other airlines.

Elizabeth Casolo

Elliott Investment Management tried to use its activist stake in Southwest Airlines to oust CEO Bob Jordan, but Jordan remains in power. Now he’s revealing how Southwest plans to keep up with rival airlines.

At a Skift Aviation forum on Tuesday, Jordan said he believes “this chapter is closed” for Elliott.

“You get feedback from your shareholders, not just from Elliot,” Jordan said. “And the feedback was clear. We needed to continue to refresh our board of directors.”

Five directors selected by Elliott joined Southwest’s board, and former chairman Gary Kelly stepped down.

Jordan said changes have been going on at Southwest for some time, but Elliott has accelerated the process. “Southwest Airlines will return to industry-leading profitability,” Jordan said.

Coming Changes

In addition to considering customer preferences, the company conducted simulations to estimate how certain changes would affect boarding times.

“This is by far the most in-depth study we’ve ever done,” Jordan said.

The assigned seats and extra legroom are a big benefit for passengers. Jordan said 86% of customers who don’t choose Southwest do so because of these concerns.

These seat adjustments, airline partnerships and red-eye flights may be standard at other airlines, but they’re all part of Southwest’s effort to keep up with the times.

“A lot of customers like red eye, but from an efficiency standpoint it just makes the planes more loaded, makes our people more efficient,” Jordan said.

Another change: eliminating the use of documents in the cockpit and cabin of the aircraft, a transition that airlines have made over the past decade.

“If we had a stand-alone diversion to an airport that Southwest Airlines doesn’t serve… because we were paper-based, you would have to find someone with a printer to reprint new shipping and clearance documents, fueling documents,” said Jordan. “And today we walk into an autonomous airport, you press a button on the iPad and off you go.”

Another controversial choice: leaving Atlanta.

While the company still operates more than 50 flights a day at the world’s busiest passenger airport, it is shifting its focus to other cities. Jordan is trying to spot growing demand, highlighting Austin and Nashville as areas for growth.

“Southwest Airlines will win, but you have to pick your battles,” Jordan said.

Where the South West remains resilient

As inflation and labor costs rise, Jordan believes Southwest remains in a good position.

“Southwest Airlines has all its labor contracts frozen,” he said.

Other airlines have adopted Southwest’s strategy: no change fees. But Jordan doesn’t see the threat when it comes to company politics.

“We have always had an industry-leading, customer-focused and customer-friendly policy,” Jordan said. Some of the policies he mentioned: Southwest credits and Rapid Rewards points that never expire, and no checked bag fees.

“We have been advocates for consumers and clients from the very beginning, without a doubt, period,” Jordan said.

What else is in Jordan’s playbook?

• Joining forces: Jordan has teased the possibility of Southwest joining IATA, although there is no official plan yet.
• Dealing with bad press: “I didn’t read any of it,” Jordan said, reflecting on the media coverage of Elliott’s activism.