Southwest CEO Says He Won’t Resign Despite Elliott’s Activist Pressure

Southwest CEO Bob Jordan said he doesn’t plan to resign following activist fund Elliott Investment Management’s calls for a major leadership change at the airline, according to a report from Reuters. 

The CEO made the comments to a group of reporters at a Politico event on Wednesday. Jordan added he would consider Elliott’s feedback. 

“I have no plans to resign,” Jordan said, according to Reuters. 

At the Politico event, Jordan said Southwest is ready to adapt its business model. 

“You can’t be stubborn,” Jordan said. “If customer demands are changing and expectations are changing you must change with them while being true to what you stand for.”

Jordan also said he believed the carrier is in its “third generation” and that customer preferences are changing significantly. Southwest commenced its operations in the 1970s and fashioned itself as a maverick that could “democratize the skies” with its low fares, open boarding and unassigned seating. 

“There is a desire to have almost every single thing be able to be done on the mobile app and self-service,” he said, “so, you’ve seen us add bag tracking there and we’ve added same-day standby on the app. There’s so many things that you could do.”

Elliott Presses for CEO and Chairman Changes

Elliott took a nearly $2 billion stake in Southwest this past week, making it one of the carrier’s largest investors. The firm is primarily calling for Jordan and Chairman Gary Kelly to resign due to Southwest’s recent underperformance. 

Elliott did not immediately respond to a request for comment. Artisan Partners, an asset management firm that has a 1.82% stake in Southwest, sent a letter to the airline’s board of directors on Wednesday saying it supported a leadership change.

“We are writing today to urge the Board to reconstitute itself and upgrade the Company’s leadership such that it can objectively assess the best path forward for Southwest’s shareholders, employees, and customers,” Artisan Partners letter read.

Jordan said in a call with analysts in April that the carrier is debating whether to make significant changes to its business model. Those potential changes could include implementing assigned boarding and seating, along with launching a premium cabin. Previously, Jordan ruled out baggage fees — Southwest currently allows passengers to check in the first two bags at no charge.  

So far, Southwest has not been profitable in 2024. It reported a first-quarter loss of $231 million, which was below Wall Street expectations and worse than its competitors. Delivery delays with the Boeing 737 Max 7, high labor costs and sustained demand for premium and international travel have all hampered Southwest’s bottom line. 

Southwest Execs Expect to Reveal More Changes in September

The airline has previously come under criticism for being slow to change. For example, Southwest’s outdated IT systems were in the spotlight after Winter Storm Elliott caused the airline to cancel thousands of flights in 2022. 

The carrier also just started adding its fares to Google Flights, after resisting partnerships with the search platform and other online travel agencies for years to cut distribution costs and build loyalty among its customers. 

Southwest executives are expected to reveal more changes to its business model during an investor day in September. 

Elliott has also taken issue with how the majority of Southwest’s leadership has worked at the airline for an average of 25 years. For example, Chairman Gary Kelly served as CEO for 18 years though 2022, and took up his role as chairman in 2008.

“The mandate from the Board has been clear: Keep doing things the way they have always been done,” read a letter from Elliott to Southwest’s board of directors.

The activist fund has also invested in other travel companies like Dean Hotels and Travelport. A few of Elliott’s activist pushes have led to CEO resignations, including at telecommunications giant Crown Castle and energy company NRG. 

Southwest has doubled down on its strategy amid Elliott’s activist pressure, saying it believes it has “the right plan and the right team in place to drive long-term value for our Shareholders.”

Note: We updated this story to cite Artisan Partners’ support of a leadership change at the airline.