Southwest Airlines profit tops estimates, company expects higher revenue in fourth quarter

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/>