Southwest Airlines Announces Agreement with Elliott

(Reuters) – Southwest Airlines announced an agreement with activist investor Elliott to end a months-long boardroom battle on Thursday.

Key Changes

• CEO Bob Jordan will retain his position.
• Executive Chairman Gary Kelly will expedite his retirement.
• Six new directors will be added to the board.

Financial Performance

The U.S. carrier reported a surprise third-quarter profit of $89 million, or 15 cents per share, benefiting from improved pricing, demand, and rebookings from passengers affected by the global cyber outage in July. Analysts had expected a loss of $12.65 million.

Despite challenges from inflated costs and competition leading to discounted fares during the summer travel season, Southwest managed to improve profitability. The annual domestic seat growth has slowed from 5.5% in July to 1.5% in October and November, as reported by BofA analysts.

Future Outlook

Southwest anticipates a 3.5% to 5.5% increase in fourth-quarter revenue per available seat mile, with a projected 4% capacity reduction. CEO Jordan emphasized a focus on tactical and strategic initiatives to enhance financial performance.

The airline has faced difficulties from Boeing's jet delivery delays and high operating costs, including labor and maintenance expenses, but expects to receive about 20 new jets from Boeing this year.

The operating revenue for Southwest Airlines rose 5.3% to $6.87 billion in the third quarter, and shares increased by 1.5% in premarket trading.