Southwest Airlines Strategy to Restore Profits

(Reuters) – Southwest Airlines (NYSE:LUV) has warned employees of upcoming tough decisions aimed at restoring profits and responding to demands from activist investor Elliott Investment Management, according to a Bloomberg News report on Saturday.

The airline is planning to revise its flight routes and schedules to increase revenue. This information was shared in a video message to employees by Chief Operating Officer Andrew Watterson.

“I apologize in advance if you as an individual are affected by it,” Watterson stated, though he provided no specifics on the forthcoming changes.

Southwest has not yet responded to a Reuters request for comment.

Context

The airline has been struggling since the COVID-19 pandemic, exacerbated by Boeing (NYSE:BA)’s aircraft delivery delays and an oversupply in the domestic market.

To attract premium travelers, Southwest plans to offer assigned and extra-legroom seats, as well as introduce overnight flights. Details are to be disclosed to investors on September 26.

Earlier in the week, it was reported that Elliott, which holds 10% of Southwest’s common shares, expressed a desire to replace CEO Robert Jordan, despite the airline’s commitment to board changes.