Skift Take
Southwest had a rough going over the past few months, but CEO Bob Jordan says he has a plan. The Southwest experience may not look too different from other airlines.
Elliott Investment Management tried leveraging its activist stake in Southwest Airlines to push CEO Bob Jordan out – but Jordan is still in charge. Now, he is unpacking how Southwest plans to keep up with competing airlines.
At Tuesday’s Skift Aviation Forum, Jordan said he thinks “that chapter is closed” with Elliott.
“You get feedback from your shareholders, not just Elliott,” Jordan said. “And the feedback was clear. We needed to continue our board refresh.”
Five of Elliott’s director picks joined Southwest’s board, and former chairman Gary Kelly left.
Jordan said changes have been underway at Southwest for a while, but Elliott sped up the process. “Southwest Airlines will return to industry-leading profitability,” Jordan said.
Changes to Come
On top of considering customer preferences, the company ran simulations to evaluate how certain adjustments would impact boarding times.
“This is by far the deepest set of research that we have ever done,” Jordan said.
Assigned seats and extra legroom are a big selling point for passengers. Jordan said 86% of customers who don’t choose Southwest do so because of these concerns.
These seating adjustments, airline partnerships and red-eye flights may be standard on other airlines but are all part of Southwest’s agenda to keep pace.
“A lot of customers love red-eyes, but what it does for you on the efficiency side is it just makes the aircraft utilization even higher, makes our people more efficient,” Jordan said.
One other change: going paperless in the cockpit and cabin, a transition airlines have made in the past decade.
“If we had an offline diversion into an airport that Southwest Airlines does not serve… because we were paper based, you had to go find someone with a printer to reprint the new dispatch and dispatch release paperwork, the fueling paperwork,” Jordan said. “And today we go into an offline airport, you punch a button on the iPad and off you go.”
Another contentious choice: pulling back from Atlanta.
While the company still offers over 50 flights a day at the world’s busiest passenger airport, it’s shifting its focus to other cities. Jordan is trying to spot mounting demand, noting Austin and Nashville as areas for growth.
“Southwest Airlines is going to win, but you do have to pick your battles,” Jordan said.
Where Southwest Is Staying Steady
As inflation and labor costs go up, Jordan believes Southwest is still in a good spot.
“Southwest Airlines has every one of their labor contracts locked up,” he said.
Other airlines have adopted a Southwest strategy: no change fees. But Jordan doesn’t see a threat when it comes to company policies.
“We have had the industry’s best set of customer-leaning, customer-friendly policies forever,” Jordan said. Some of the policies he mentioned: Southwest’s credits and Rapid Rewards points that don’t expire and no fees for checked bags.
“We have been the champion for the consumer and the customer from the start, hands down, period,” Jordan said.
What Else Is in Jordan’s Playbook
- Joining forces: Jordan teased the possibility of Southwest joining IATA, while there is no official plan yet.
- Dealing with bad press: “I didn’t read any of it,” Jordan said, reflecting on the media coverage of Elliott’s activism.
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