DALLAS — Southwest Airlines raised its third-quarter revenue forecast on Thursday, announced its board authorized $2.5 billion in share buybacks and detailed a number of changes to its business model because it seeks to fend off activist Elliott Investment Management.
The airline said it expects unit revenue to rise as much as 3% within the third quarter over the identical period last yr, up from a previous forecast of a decline of as much as 2%, helped partially by rebooking passengers who were originally flying airlines affected by July’s CrowdStrike outage.
The carrier also said it might add Bob Fornaro, a well-respected industry veteran who previously led Spirit Airlines, to its board of directors. Southwest and Fornaro return greater than a decade. He had served as CEO of AirTran, the airline Southwest combined with in 2011, and was a consultant to Southwest after the merger.
Southwest executives are presenting their vision for the corporate’s future on the airline’s Dallas headquarters on Thursday in an investor day presentation. CEO Bob Jordan and Southwest’s other senior leaders are under increasing pressure from Elliott, which has called for a leadership change on the carrier.
Southwest executives will attempt to persuade investors that it’s on the suitable track to spice up profits and increase revenue. Over the summer, it unveiled dramatic changes to its greater than half-century-old business model, including assigned and extra-legroom seats, which could generate more revenue for the carrier.
In its presentation on Thursday, Southwest stood firm on its long-standing policy of allowing customers to examine two pieces of bags without spending a dime, saying it “generates market share gains in excess of potential lost revenue from bag fees.”
A day earlier, Southwest told staff it should slash its service in Atlanta next yr and will cut greater than 300 flight attendants and pilots from the town in an effort to cut back costs.
Earlier this month, Southwest’s executive chairman and former CEO Gary Kelly said he would step down by the top of next yr. Elliott later told Southwest mechanics’ union that it still wanted a leadership change at the highest of the carrier. The firm didn’t immediately comment on Southwest’s strategy presentation it released Thursday.
— CNBC’s Rohan Goswami contributed to this report.
