Summary Activist investor Elliott criticizes Southwest Airlines' new initiatives and wants leadership changes. In a Fortune op-ed, former United CEO advised Southwest to stay on course with smart transformation. Southwest Airlines changed boarding to assigned seating due to customer demand.
Elliott Investment Management, a private equity firm and activist investor, has criticized Southwest Airlines executives after the airline unveiled new revenue-boosting initiatives. These initiatives include ending its long-standing open seating policy, introducing segmentation with premium seating options, and starting 24-hour operations with overnight flights. In a Fortune op-ed, former United Airlines CEO Oscar Munoz argued that Elliott's strategy for Southwest Airlines might not be entirely ideal.
He criticized the firm's focus on leadership changes and short-term financial gains, suggesting these tactics may need to align better with the airline's long-term growth and stability. Advising to stick with its new course The aviation industry faces several challenges, including staff shortages due to COVID-19, fluctuating fuel prices, IT system outages, airline employee strikes, shifting passenger demands, and supply chain bottlenecks. According to Munoz, the industry challenges have driven low-cost airlines like Spirit Airlines and JetBlue Airways to introduce new business initiatives, such as segmentation.
Similarly, Southwest Airlines is making these changes to address customer demands..