Southwest activist fight exposes strains across US air travel

When Bob Jordan addressed Southwest Airlines Co. shareholders after another disappointing quarterly performance in April, the CEO expressed regret and promised to do better. Elliott Investment Management isn’t accepting the apology. The activist investor on Monday called for the ouster of Southwest’s leadership as it revealed a $1.9b stake, setting up a fight at one of the world’s largest carriers. It’s the latest activist play in the beaten-down air travel market, after Carl Icahn earlier this year parlayed an almost-10% stake in JetBlue Airways Corp. into two board seats. Elliott is calling for new management at Southwest and a “comprehensive business review“ geared toward cutting costs, improving customer choice and upgrading its technology in a bid to boost Southwest’s stock performance 77% over the next year. The drama is playing out against a backdrop of overly optimistic forecasts by many airlines that have dashed investor hopes for sustainable profit growth and punished stock prices — even as the industry enjoys record passenger numbers. Some of that has been outside of senior management teams’ control, such as volatile jet fuel prices, aircraft grounded by defects in RTX Corp. engines and postponements by Boeing Co. of new jets needed to expand. But airlines have also copped to painful blunders. American Airlines Group Inc.’s CEO admitted last month that the carrier’s marketing strategy had angered corporate clients. JetBlue got stuck with excess capacity for Latin American routes. Spirit Airlines Inc. and Frontier Group Holdings Inc. have recently begun to rethink their cheap-chic ethos. And a near total meltdown at Southwest in late 2022 stranded millions of travelers, something Elliott pointed out as a sign of ineptitude. Story has more details.<br/>