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

12.06.2024 - 17:59 / skift.com / Gary Kelly / Bob Jordan / Elliott Management / Elliott Investment Management / Meghna Maharishi

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 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. 

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. 

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