Southwest skeptics are ‘missing the point,’ CEO says

Southwest executives are pushing back against a rising chorus of analysts who say the company’s days as the airline industry’s disruptive force are over, reined in by higher wages and tougher operational challenges. The carrier known for its no-frills aesthetic and competitive prices is under pressure because its model is being put to the test, 50 years after its first commercial flight. Southwest increased starting pay to $15 an hour in August, and may have to go higher in some parts of the country to meet goals to hire thousands of workers, CEO Gary Kelly and his executive team said in an interview Friday. They also signaled their more cautious approach to rebuilding flight capacity -- adopted after a more aggressive plan backfired this year -- is likely to last well into 2022. Those forces have weighed on Southwest’s stock, the worst performing of major US airlines this year. And some analysts are skeptical that the company can regain the profitability and efficiency that once made it the industry darling. Goldman Sachs, UBS and Jefferies downgraded the shares after Southwest’s investor day this week, with Jefferies analyst Sheila Kahyaoglu calling it “no longer the low-cost carrier” in a research note. The analyst “is wrong -- absolutely dead wrong,” Kelly said. “They are missing the point that we are perfectly positioned for the environment.” Kelly, who will become executive chairman on Feb. 1, and Bob Jordan, who will take over as CEO, outlined a plan to fill 5,000 jobs this year and 8,000 in 2022. That would help replenish a workforce depleted by 4,500 voluntary departures during the pandemic. This year’s hot job market has pitted Dallas-based Southwest against Amazon.com, UPS and numerous other employers all vying for the same pool of entry-level workers.<br/>