Southwest Airlines (WN, Dallas Love Field) held a highly anticipated investor day briefing in Dallas on September 26, where it unveiled several product changes aligned with contemporary customer preferences and designed to increase revenues. It was the latest bid by Southwest's management to convince shareholders, including Elliott Investment Management, that it is capable of reviving the carrier's flagging financial fortunes.
"We're now ushering in a new era at Southwest, moving swiftly and deliberately to transform the company by elevating the customer experience, improving financial performance, and driving sustainable shareholder value," said CEO Bob Jordan.
The inflight product changes planned are assigned seating (available in the first half of 2026), extra legroom seats, and changes to the boarding process. Southwest will continue to offer free checked in luggage.
In addition, it will start forming partnerships with international carriers to expand its network and generate additional demand for travel across the Southwest network. Icelandair (FI, Reykjavik Keflavik) will become its first partner and is expected to launch in 2025 through Baltimore International, with additional gateways added throughout the year. Southwest intends to add at least one additional partner carrier next year.
The Texan ULCC will also seek to quicken airport turnarounds to increase aircraft productivity. It says that by late 2025, the turn-time initiative is expected to create the equivalent of around 16 free aircraft. Southwest will also become a 24-hour carrier by offering red-eye flights in key markets. Red-eye flying is expected to create the equivalent of approximately 18 free aircraft in 2025. Southwest says such initiatives will increase revenues without additional aircraft or headcount.
Southwest calls its balance sheet "industry-leading." However, it intends to generate USD500 million in savings between now and 2027 by minimising hiring, optimising scheduling efficiencies, capitalising on supply chain opportunities, and improving corporate efficiency. As of September 26, Southwest had 497 firm aircraft orders with Boeing, for 288 B737-7s, 209 B737-8s. In addition, the airline has 197 options for either type, giving it access to 694 aircraft through 2031. Southwest says it has significant flexibility with the orders, including options, deferral rights, and the ability to change the mix of -7s and -8s. It says it will consider selling aircraft in the right market conditions and is selectively considering sale/leasebacks while maintaining leverage targets.
However, the promised overhaul did not satisfy Elliott Investment Management, which now owns around 11% of the airline's common stock and is agitating for change, including boardroom and management changes. In a statement following the presentation, Elliot said the investor day "will have a familiar ring for many shareholders: another promise of a better tomorrow from the same people who have created the problems we face today."
It added: "The board continues to evade the most critical question facing Southwest: why is Mr Jordan, who has delivered years of unacceptable financial results and, until very recently, was dismissive of the actions announced today, the right leader to execute on these transformative changes? The answer is clear: he is not. We came away from extensive engagement with Southwest’s leadership, including in-person meetings and more than a dozen phone calls, even more convinced that current leadership is incapable of delivering on Southwest’s potential."
Elliott says it still intends to call a special shareholders meeting and is encouraging other shareholders to call back their shares and prepare to elect what it calls a "best-in-class" board of directors to enact change at the carrier.