A Southwest industrial airliner takes off from Las Vegas on Feb. 8, 2024.
Mike Blake | Reuters
Southwest Airlines CEO Bob Jordan said the corporate is able to adapt to changing customer trends like premium seating as pressure from an activist investor mounts.
“We’ll adapt as our customers’ needs adapt,” Jordan said at an industry event hosted by Politico on Wednesday.
Jordan’s comments got here two days after hedge fund Elliott Management disclosed a $1.9 billion stake in Southwest and said the carrier needs a recent CEO and recent chairman.
In April, Jordan told investors that the airline is considering major changes to its product, potentially ditching its system of unassigned seating that has made the Dallas-based carrier a standout amongst airlines, and even reevaluating its single class of service.
Jordan reiterated those considerations Wednesday, saying that the airline, which began flying in 1971 and now carries more passengers in the US than every other, is in its “third generation.” He said the airline’s leaders are open to big shifts to extend revenue, while rivals like Delta and United capitalize on customers willing to pay up for a seat with more room or other perks.
Elliott didn’t immediately reply to a request for comment about Jordan’s remarks on Wednesday.
Southwest on Monday said in response to the activist campaign that its board backed the corporate’s leaders and the airline’s strategy, while it’ll also “look ahead to further conversations with Elliott.”
Southwest has struggled with weaker margins than a few of its competitors because it faces increased airline capability within the U.S., shifting post-pandemic travel patterns and a spiraling problem that’s out of its control: delays of latest planes from Boeing, its sole aircraft provider, as that company grapples with several manufacturing and safety crises. The airline expects to receive just 20 Max jets from Boeing this yr, down from an earlier forecast for near 80 recent planes.
Southwest had also taken months to search out its footing after a year-end holiday meltdown in 2022 cost it greater than $1 billion. The corporate later acknowledged its technology couldn’t handle the a whole bunch of flight and crew changes triggered by a winter storm, prompting it to quickly upgrade its system.
Meanwhile, Jordan said Southwest has continued to work toward improving the client experience. It’s upgraded its inflight Wi-Fi and added power outlets on its fleet of Boeing 737s lately.
“I feel customer preference goes beyond that,” Jordan said Wednesday. The carrier has spent months surveying customers to determine what changes are needed, he added.
“It has been several years since we last studied this in-depth, and customer preferences and expectations change over time,” an airline spokeswoman told CNBC. “We’re also studying the operational and financial advantages of any potential change.”
— CNBC’s Rohan Goswami contributed to this text.
