A second major Southwest Airlines Co. investor has joined the call for a shakeup in the carrier’s board and executive leadership team, upping the pressure for change.
Artisan Partners Limited Partnership, Southwest’s ninth-largest shareholder, urged the board in a letter on Wednesday to “reconstitute itself and upgrade company leadership” in order to fairly assess the path forward for the airline.
“We believe this process needs to commence immediately,” Artisan said in the letter.
Artisan becomes the second Southwest investor to call publicly for major changes at the carrier due to frustrations with the company’s lagging financial performance and insular corporate culture.
It joins activist Elliott Investment Management, which on Monday publicly disclosed a $1.9 billion stake in the airline and demanded new leadership and a revamp of Southwest’s business to better compete with other airlines.
Artisan’s letter came hours after Southwest Chief Executive Officer Bob Jordan said he would resist Elliott’s call to step down as the company considers a variety of changes to improve its performance.
“I have no plans to resign,” 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 were Jordan’s first since Elliott publicly revealed its stake, 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.”
Southwest did not immediately respond to a request for comment on Artisan’s letter.
Elliott earlier 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 declined to comment.
