Bob Jordan, CEO of Southwest Airlines, listens to questions from media during Southwest Airlines Investor day at Southwest Airlines Headquarters on September 26 in Dallas (Sam Hodde for The Washington Post via Getty Images)

Southwest hasn't pulled out of the turbulence yet, but it gets to keep its pilot

Meanwhile, former CEO Gary Kelly, who’s currently executive chairman, “will accelerate his retirement” in a deal with activist investors.

J. Edward Moreno

10/24/24 9:54AM

Southwest Airlines said Thursday that it reached a deal with activist investor Elliott Investment Management that would allow CEO Bob Jordan to keep his job, avoiding a brewing proxy fight.

The deal adds six new directors, five of them picked by Elliott, to the airline’s board, which will be reduced to 13 members next year. They include Pierre Breber, the former chief financial officer of Chevron, and David Cush, former CEO of Virgin America.

Elliott was reportedly pushing to oust Jordan. While he was able to keep his job, former longtime CEO and current executive chairman Gary Kelly “will accelerate his retirement” and walk out the door November 1.

Airlines went through a rough patch during the pandemic, taking on loads of debt while revenue dropped. But Southwest hasn’t enjoyed the same level of postpandemic recovery that its peers have.

Southwest Airlines share price took a beating before Elliott announced a $2 billion stake in June. The company recently said it would scrap its love-it-or-hate-it cattle-call boarding in favor of assigning seats like other airlines.

There may be a light at the end of the tunnel: the company reported better-than-expected earnings on Thursday.

Max Knoblauch7h

Premium seats help push airlines higher following third-quarter results

Shares of American Airlines are climbing toward the carrier’s best trading day since August 12, when ultra-budget rival Spirit issued its initial warning about its ability to survive. American’s shares are up more than 7% on Friday afternoon.

Investors’ optimism comes a day after American posted a better-than-expected full-year earnings forecast. In a call with investors, American said that it’s ramping up its premium cabin offerings.

“Our ability to grow capacity in premium markets will be further supported as we take delivery of new aircraft and reconfigure our existing fleet. These efforts will allow us to grow our premium seats at nearly two times the rate of main cabin seats,” CEO Robert Isom said. American CFO Devin May said that nose-to-tail retrofits of certain wide-body jets will bump the number of premium seats available on those planes by 25%.

Extra legroom has been a boon for major carriers, particularly this quarter. Delta Air Lines said its premium product revenue grew 9% in Q3, compared to a 4% drop in economy seat revenue. Similarly, United Airlines said its premium revenue grew 6%, outpacing economy. Shares of both airlines were up more than 3% on Friday.

Carriers with less exposure to first- and business-class tickets like Southwest Airlines and JetBlue didn’t see the same amount of momentum on the day.