Southwest Airlines Co.’s chief executive officer is resisting pressure to step down after activist firm Elliott Investment Management took a $1.9 billion stake and called for new leadership at the carrier.
“I have no plans to resign,” Bob Jordan told reporters Wednesday following an appearance at an aviation event in Washington. “My 150% focus is on supporting our employees, doing good for our customers and executing the wonderful plan we have to get better.”
The remarks are Jordan’s first since the activist firm publicly revealed the stake on Monday, making it one of Southwest’s biggest shareholders. Elliott also demanded an overhaul of the airline’s strategy and specifically criticized Jordan and Executive Chairman Gary Kelly for poor execution and a “stubborn unwillingness to evolve the company’s strategy.”
Southwest executives haven’t yet met directly with Elliott, but “like any investor, we’ll engage them,” Jordan said. “We want to understand what their ideas are.”
The activist chided Southwest for having “written off” streams of revenue that rivals have broadly adopted in the last 15 years, such as offering a bare bones basic economy fare and charging customers for checked luggage.
Before Elliott disclosed its stake, Southwest had already opened the door to possibly changing some long-held aspects of its business model, such as adopting assigned seating.
But in his comments on Wednesday, Jordan signaled the carrier is unlikely to abandon its “bags fly free” policy. Southwest is the only US carrier that allows customers to check two bags at no cost.
Customer data and surveys show that a significant portion of Southwest’s customers choose the carrier because of that policy, about as many that book trips because of its route network, Jordan said.
“You’ve got to be very informed before you start proposing changes that could affect the business model of Southwest Airlines,” he said.
Elliott didn’t immediately respond to a request for comment Wednesday.
