unaligned

Southwest Airlines’ third-quarter profit fell from a year ago but topped Wall Street estimates as the carrier worked to drum up revenue and fend off activist investor Elliott Investment Management. Elliott and Southwest struck a deal, announced Thursday, that averts a proxy fight and adds six of the activist’s candidates to the board. CEO Bob Jordan will keep his job as part of the deal. The Dallas-based carrier forecast unit revenue for the fourth quarter would increase 3.5% to 5.5% on a 4% drop in capacity compared with a year ago. It said costs, excluding fuel, would likely rise as much as 13%. “Thus far in the quarter, travel demand remains healthy and bookings-to-date for the holiday season are strong, demonstrating the continued resilience of the leisure travel market,” Southwest said in an earnings release. Other carriers have pointed to strong travel demand to close out 2024 as airlines scale back unprofitable capacity that pushed down airfare. Separately, Southwest last month laid out a three-year plan that the company would add $4b to earnings before interest and taxes in 2027. The airline also said it authorized a $2.5b buyback and would slash underperforming flights from Atlanta to cut costs. Southwest said Thursday that it will repurchase $250m of Southwest stock through an “accelerated” program under the overall buyback plan. The carrier is planning to abandon its longtime open seating to instead charge for seats as well as offer extra legroom options that come at a higher price, the biggest changes in its more than 50 years of flying.<br/>

Southwest Airlines and activist hedge fund Elliott Investment Management struck a deal to avert a proxy fight in exchange for naming six directors to the airline’s board — short of board control — and an earlier retirement for Executive Chairman Gary Kelly. Southwest CEO Bob Jordan will keep his job as part of the deal. “We are pleased to have come to an agreement with Southwest on the addition of six new directors that will enhance and revitalize its Board,” Elliott’s John Pike and Bobby Xu said in a statement Thursday. Five of Elliott’s board nominees along with former Chevron CFO Pierre Breber will join the board, which will stand at 13 members, Southwest said. The Southwest board will appoint a new chairman to replace Kelly, who will now step down next month instead of next year. Elliott had called for both Kelly and Jordan’s ouster and criticized the airline’s leadership for not moving fast enough on sales- and profit-boosting strategies. The airline has made few changes to its business model in its 50 years of flying and is now planning to upend its long-standing policies like open seating and a single-class cabin for premium seats that more profitable carriers like Delta Air Lines offer. Southwest’s shares are up less than 1% this year while the S&P 500 has risen 21%. The airline’s third-quarter profit, also announced Thursday, topped analysts’ estimates. Shares in the carrier were down roughly 6% in midday trading. The Dallas-based carrier has been slashing unprofitable routes to cut costs. At an investor day last month, it said the new revenue initiatives and other changes put it on track to boost earnings before interest and taxes in 2027 by $4b. The airline also authorized a $2.5b buyback, the first $250m of which was announced Thursday. <br/>

Spirit Airlines agreed to sell 23 Airbus SE aircraft for $519m, giving the budget carrier a much-needed cash boost as it nears a possible bankruptcy filing. Net proceeds from the sale, combined with eliminating the plane-related debt from its balance sheet, will boost Spirit’s liquidity by about $225m through year-end 2025, according to a regulatory filing Thursday. The airline plans to deliver the planes through February to the buyer, GA Telesis LLC. The deal comes as Spirit holds talks with Frontier Group Holdings Inc. about filing for bankruptcy to facilitate a takeover by the rival discount carrier, Bloomberg reported Wednesday. Spirit is facing a liquidity crisis after its attempt to merge with JetBlue Airways Corp. was blocked on antitrust grounds, and subsequent efforts for a rescue by creditors were unsuccessful. Spirit has sought to restructure its debt and said Thursday that it’s in “active and constructive discussions” with holders of senior secured notes due 2025 and convertible senior notes due 2026.<br/>

A New Jersey woman is suing JetBlue in federal court over an ice cream sandwich she claims was “dangerously cold,” alleging the cabin crew should have warned her the treat was “frozen solid.” In a lawsuit filed Tuesday and obtained by The Independent, Karla Quinonez says JetBlue was negligent for “serving food at a temperature below what is reasonable or safe for consumption.” The carrier then compounded the problem by “failing to warn [her] of the dangerously cold temperature and solid state of the ice cream sandwich she was served,” according to Quinonez’s complaint. “The ice cream sandwich that Defendant served to Plaintiff was frozen solid and caused Plaintiff to sustain severe bodily injuries, including a root fracture of tooth number 10,” the complaint says. JetBlue representatives did not respond to requests for comment on Thursday. On August 20, Quinonez and her partner were aboard JetBlue flight 1907 from JFK to Paris, when, during the meal service, Quinonez was given a “‘chomp size’ strawberry shortcake ice cream sandwich made by the Nightingale Ice Cream company,” the complaint states. But, Quinonez argues, no one said anything about how hard the treat would be, and she immediately cracked her upper left lateral incisor when she bit down, the complaint goes on. This necessitated an emergency tooth extraction immediately upon landing, a subsequent implant, and continuing care upon returning to the United States, according to the complaint, which blames Quinonez’s “pain, suffering, and mental anguish” solely on JetBlue’s “negligent acts.”<br/>

Aer Lingus ground and cabin crew will seek a 4% pay increase early next year after the airline’s pilots won a 17.75% boost following a bitter summer dispute. The carrier’s ground and cabin crew last year accepted a 12.25% increase before the pilots’ industrial action. Their deal allowed them to re-enter talks with the company should any other group of workers reach better terms. Union officials confirmed that representatives of those employees will begin talks with the company on a further 4% increase early next year. Aer Lingus has already agreed to raise ground and cabin crew pay by a further 1.5% from October 1st, 2025, leaving a 4% difference with pilots. Terry Gill, the Siptu organiser who represents around 1,300 workers at the airline, said unions had agreed with management to begin talks on the 4% in the new year. He explained that Aer Lingus will pay 3% under the current agreement in January. Next month it will pay a E750 voucher to cabin and ground crew, which amounts to a once-off 1.5% increase.<br/>

Icelandic budget carrier Play expects to slash the proportion of hub-and-spoke operations in its activity from 75% to just 30% as it adopts a new business model. Leisure travel will account for 35% – up from the current 25% – while charter and wet-lease services will account for the remaining 35%. Play expects to make the transition to the new model over the next 12-18 months. It opted for the strategic change to focus on its profitable point-to-point leisure operations, and reduce its loss-making hub-and-spoke activity. “This [hub-and-spoke] part of [our] network is unlikely to become adequately profitable in the near future with the current operational structure,” says CE Einar Orn Olafsson. Play operates to five North American destinations but will cut back to serving two or three destinations daily in summer, reducing operations further in winter. Olafsson says the stable margins of its leisure operation, in contrast to hub-and-spoke, show “no signs of tapering off”. But the leisure operation cannot accommodate Play’s entire fleet, currently 10 Airbus jets, so the change of model will include applying for a Maltese air operator’s certificate – which Play expects to have in spring – in order to place fleet capacity in other locations.<br/>