Any time something happens in this airline industry we love, there’s a good chance I have an opinion on it. And to get to that opinion, I first have to figure out where the company that’s making the move is coming from. I may disagree completely, but it helps me to feel like I understand why something is happening. With activist investor Elliott Investment Management’s attempt to wrest control of Southwest’s board and replace its CEO, however, I just can’t figure out the plan at all. The latest news is that Elliott has called a special board meeting and put out a podcast. I’m serious.
The original plan put forth by Elliott earlier this year was to replace directors on the board so it would then have a majority. It also wanted CEO Bob Jordan gone. Like many investors, Elliott was unimpressed by Southwest’s financial performance and thought it could make good money by installing people who were focused on short term gain.
As it considered its ideal board, Elliott wanted people with more hands-on airline and tech experience to help guide a financial turnaround. In August, Elliott announced that it had a slate of ten directors it would put forward. As it said at the time:
The final group of Candidates includes four former airline CEOs and Deputy CEOs and six Candidates with complementary expertise in technology, hospitality, consumer-focused businesses, labor relations and regulatory oversight, including experience leading organizational change in these areas.
It’s clear what the company wanted, and here’s the list:
- Michael Cawley, deputy CEO, COO, and CFO of Ryanair until 2014, then went to an Irish tourism board but is now retired
- David Cush, CEO of Virgin America until 2016, currently runs a private equity-backed auto repair business
- Sarah Feinberg, Administrator of the Federal Railroad Administration until 2017, doesn’t appear to be working currently
- Josh Gotbaum, investment banker in the early ’90s, Chapter 11 Trustree for Hawaiian until 2005, Director of the PBGC until 2014, currently seems to be mostly a professional board member
- Dave Grissen, Group President of the Americas for Marriott until 2021, currently seems to be mostly a professional board member
- Robert Milton, CEO of Air Canada until 2004, then various roles at the top of AC’s holding company ACE until 2012, board chair at United until 2018, currently seems to be mostly a professional board member
- Gregg Saretsky, CEO of WestJet until 2018, currently seems to be mostly a professional board member
- Patty Watson, the current EVP and CIO/CTO at NCR Atleos which appears to be a banking and ATM tech company
- Eash Sundaram, Chief Digital and Technology Officer of JetBlue until 2021, now venture capitalist and professional board member
- Nancy Killefer, former McKinsey partner who now is a director there and is a professional board member
This is… an interesting list. If you’re looking for people with real, relevant airline experience, you might point to David Cush, Robert Milton, and Gregg Saretsky here. But David — while very successful at getting an exit thanks to the bidding war that developed — never created a financial overperformer at any point during Virgin America’s existence. Robert Milton — successful as the catalyst for bringing Scott Kirby to United — is a financial engineer who split Air Canada into various pieces that took years to fix. And Gregg Saretsky, well he may have the most releveant experience, but I’ll talk about him down below.
While Elliott was putting this slate forward, Southwest clearly felt the pressure. Presumably other investors were grumbling along similar lines, so the airline took action. It announced that it would shrink the size of its board to 12. Current Chairman Gary Kelly would step down at the annual meeting next year, and six others would step down this November. It also changed some of its governance structures. But the board stood behind retaining CEO Bob Jordan.
As part of this, it also brought on two new board members who actually had relevant airline experience. Rakesh Gangwal ran US Airways, but don’t judge him on that. He was the co-founder of IndiGo back in 2006, a low-cost operator that has exploded into being India’s most important airline. He finally left that company’s board in 2022. There are stories about how he can be challenging to work with, but he can bring real rigor to an airline and provide unique perspective.
The other new board member is Bob Fornaro, who ran AirTran until 2011 when Southwest bought the company. He was later CEO of Spirit until 2019. I have a soft spot for Bob since I find him to be remarkably good at running airlines that need help. Every time I’ve interacted with him, I’ve come away feeling like I’ve learned something… even if the conversation never takes the most direct route.
With all of these changes alongside the whole transformation plan, you’d think that investors would be happy. At the very least, you’d think they’d be placated unless the plan falls off the tracks. But as we discussed in last week’s episode of The Air Show, Southwest’s revenue performance already looked decent in Q2, but the airline has only recently become more bullish. There is still a cost issue, but there is a lot to like if you’re an investor.
But Elliott is not that investor. Elliott is increasingly pissed off as the stock has failed to appreciate. It gathered over 10 percent of Southwest’s shares which means it can call its own special meeting. It has now done that, setting December 10 as the date.
Eash and Nancy got the axe from Elliott’s original slate, so now it’s just eight directors that are being put forward with a plan to remove eight more. Presumably Elliott likes Rakesh and Bob. Only three of the six directors that Southwest has retiring in November overlap with Elliott’s plan (William Cunningham, Thomas Gilligan, and Jill Soltau). Gary Kelly is also on the Elliott list, of course. But Elliott also wants Douglas Brooks, Eduardo Conrado, David Hess, and Elaine Mendoza gone. And if it succeeds, then the new board will call for Bob Jordan’s head as CEO.
Now up until this whole exchange, I got it. Elliott is an activist investor. It cares about making its money and then getting out. It cares less about the long-term success of the company than it does the short term gain. That’s fine, but it can’t get others to go along with that plan so it has to straddle a line to make it seem like it’s out there trying to fix the company and make it better for the long run. Sure.
But now that Southwest has made significant changes to the board and governance and put out a transformation plan that, if it works, should result in significant gains, why would other investors be willing to go along with Elliott? We aren’t talking about just a few other investors. Elliott has a little north of 10 percent of the company, so it needs to get at least another 40 percent of shares to vote for its board slate. To be clear, that’s 40 percent of shares that are ok effectively handing board control over to a minority shareholder. I don’t see why I would want to allow that. And this is why I’m so confused about Elliott’s plan.
It just seems like the odds are very much not in Elliott’s favor here. Now, if the airline fails miserably to meet its goals, reduces guidance, things fall off track, etc, then I can see Elliott having a much stronger case. But right now it seems so unlikely that it can get the support it needs. I imagine Southwest is feeling similarly, because it is getting more and more bold with its statements, starting to really fire back at Elliott more than it did initially.
But Elliott just keeps pressing forward, now introducing a brand new podcast — I am not kidding — in which it has its “Associate Director, Engagement & Investment Stewardship” interview the board slate. The first one up is Gregg Saretsky.
Gregg ran WestJet until 2018, and he proudly talks about how WestJet was a Southwest clone. Gregg does have years of good experience, but in this 18-minute interview, he doesn’t say anything about what he’d actually do to fix Southwest. He says that the airline needs to do “a deep dive and looking really critically at aspects of our business.” More specifically:
That would be my advice to folks from Southwest, is: Keep an open mind. The things that you said you would never do, you probably will at some point. But the way you do them is going to be really important, so you don’t damage the culture.
I don’t think I’ve ever heard Bob Jordan say he’ll “never” do something. In fact, I’ve heard him say more than once that you never say never. This just sounds like Gregg has been given talking points and isn’t even familiar with what current management is saying at the airline. It’s not a good look.
Like I said, this all just confuses me greatly. Why is Elliott making this move when it seems like it would be so challenging to get the support it needs? Why would these board candidates put themselves out there, especially the airline industry people like Gregg who are probably burning bridges by doing the bidding of an activist investor?
I don’t see how this special meeting will help the share price if Elliott fails to win, and the chances don’t seem great for Elliott to be able to pull out a victory. So, what is the company going to gain by going through this exercise?
Thoughts are always welcome, just head to the comments….
50 comments on “I Don’t Understand This Plan, but Elliott’s Showdown with Southwest’s Board Now Has a Date”
Great points. While WN needs lots of change, I believe its best approach is “don’t kill the brand” with radical change for short term profits. Can’t believe I’m defending WN, but I’m tired of greedy investors using a machete when a good steak knife will do.
I havent seen the word “customer” in any of these discussions. No customers, no company value. Gordon Gecko would be proud. I just fly SW four times in one week, I questioned many customers in line to board ( A and B groups). Not one was against the open boarding system. All supported Bags Fly Free. All liked the SW culture. All knew of the Elliott corporate raiders. All hated them.
Not impressed with the board selections being put forth by Elliott as they are mostly just a bunch of people who are just board sitters & don’t know what goes on at WN on a day to day basis. Also Elliott comes off like the old & cranky board member of an HOA who everyone must do whatever they say even if there views are in the extreme minority just because they own the biggest house in the neighborhood.
I wouldn’t be so careful to disregard Robert Milton like that, as many seem to be very split on his record and actions. I would argue that his experience would be great to have on the board.
@Sean The proposed candidates have a lot more aviation experience than the current Southwest board.
Good summary
Don’t know much about this level of detail in the airline biz, but Elliots slate of board members are there to act on Elliots interests. The “airline” experience is just as much publicity as the podcast.
Have you considered the possibility that this is not business but strictly personal ?
Even Wall Street Masters of the Universe can sometimes be very undisciplined and act solely out of a desire to damage another person they regard as the enemy. This is beginning to look like a vendetta.
A vendetta against whom or what?
Against Southwest board of directors for not immediately agreeing to every single demand made by Elliott but instead daring to argue back and make Elliott look less than perfect
Anon – We are talking about billions of dollars here that is under Elliott’s stewardship. This does not seem like a firm that just operates on vendetta. Everything is calculated and that’s why they have the capital they do.
A podcast? Ha!
We’ll start seeing the TikToks soon. Soon, the “Stronger Southwest dance” will become the next viral craze.
Jokes aside, this **is** the same hedge fund that squeezed over a billion dollars from the country of Argentina, so I wouldn’t underestimate their patience or skill.
Hey now! Elliott now has someone in charge of “Investment Stewardship!” So either they’ve changed their ways, or they’re deeply cynical and have another definition of “stewardship.”
Whether they are replaced or not…. What do all of those board members do for their day-to-day jobs? How do they each add value, on a day-to-day basis, for the company? How many board members does a company actually need to function, day-to-day?
That is one of the things I always consider when I get those shareholder votes to keep board members: how many are there for the size of the company involved?
Board member is not a full-time position. The full board will typically meet quarterly, and specific committees might meet monthly at most. Their job is to review the plans of the company’s full-time executives, give feedback, and approve major decisions.
Some Googling shows estimates that it might be a ~200 hour per year commitment, which seems about right.
The Board’s most important function is hiring (or firing) a CEO who sets the direction for the company.
I don’t think it’s that confusing – Elliott has decided that they don’t have confidence in Bob Jordan, and they want a different CEO. Even if they agree with the fundamentals of the plan, they might not believe that Jordan is the right leader to execute on it. And so they’re pushing for a change of leadership.
Alex – Elliott’s rationale isn’t confusing. It’s the execution.
Regardless of how Elliott feels, I don’t see how the way they are proceeding makes any sense at all.
Elliotts only purpose in life is to tear down the companies they invest in, pump the stock, then sell it and bail out. They have no interest in the long game. Look at the long-term institutional money with some of the SWA Shareholders – like Vanguard, 10 plus years.
To me – they are trying to win over employees, especially with the pilots. Patty is the wife of a SWA pilot and all of their quotes about employee dissatisfaction are solely from SWAPA leadership. They know that the pilots don’t like Bob and are trying to ride the momentum of that wave, knowing that a lot of the pilots have stock.
The message is all about a message of hope, the first podcast with Gregg was all “look how I turned this company around to greatness”. It’s all to mask that Elliott doesn’t care if Southwest turns around. It can walk in the door and do a sale-leaseback of the whole fleet, take out their money, and leave the remains to see if anyone can salvage it.
This comment is spot on.
Since none of the board candidates or current board members have any recent experience with one of the four even marginally profitable US legacy carriers, that hole seems to be noteworthy given that there is a fair degree of representation from the “nickel and dime” sector of the industry – which WN seems to be trying to avoid – and which is counter to its brand.
It’s also noteworthy that professional financial analysts in the industry are mixed about WN’s plan – some sell side analysts believe it has potential to fix WN’s problems while Moody’s (the credit agency) thinks that WN will not be able to generate the cash flow during its transition to a “better” business model and has lowered its outlook.
It is also noteworthy that UAL stock led the industry in one of its best post-pandemic sessions yesterday. UAL met investor expectations and repeated the same things about the change in demand and capacity that DAL said (the only other airline that has reported 3rd quarter financials) but UAL underperformed DAL’s margin metrics even with the CrowdStrike issue and the Paris Olympics which DAL called out. UAL says that revenue metrics should exceed cost metrics in 2025 but all airlines have seen costs growing faster than revenue and UAL is the only one of the big 4 that has yet to settle with its FAs – which should add hundreds of millions in annual cost increases and higher profit sharing and $500 million plus in retro based on AAL’s settlement if/when UAL settles which it gave no indication that it is ready to do.
UAL’s big stock bump yesterday was undoubtedly fueled by its announcement of stock buybacks – a feature that has been absent from airlines since the pandemic so may well say that airline stocks can outperform best by financial rather than operational/network strategies. LUV has also announced stock buybacks but the stock started its recent ascent about a month earlier.
“United’s third-quarter operating margin of 10.5% is expected to be the highest of the four largest US airlines, Conor Cunningham, a Melius Research analyst, said in a report. Delta reported adjusted operating margin 9.4% last week, while American and Southwest both are set to report results on Oct. 24.” Source: Bloomberg
Obviously not including or including non-operating expenses such as interest expense, special charges, and gains or losses in investments matter – but the bottom line for both, directly from each carrier’s financial statements
DAL $1.272 billion net income for an 8.1% net income margin
UAL $965 million net income for a 6.6% net income margin
UAL said they include in their forecast one major macroeconomic or operational disruption per quarter while DAL called out CRWD and the Paris Olympics as costing them together about a half billion dollars in revenue.
Notice that DL and UA’s labor expenses are almost identical with UA slightly higher without settling w/ its FAs.
These are the best two airlines in the US in terms of profitability and reported similar revenue metrics but there are still clear differences in how well they end up on the bottom line, even in the summer which is where UA does best relative to the winter while DL has less volatility in its quarter to quarter earnings.
This all matters to LUV because DL and UA both see capacity tightening and revenue metrics improving which bodes well for everyone, including LUV.
UAL got the biggest bump in stock price for itself – which some stocks in the industry also shared – by announcing a stock buyback and not because of hugely differentiated or better financial performance or outlook.
LUV’s best strategy to boost its stock price – which is what Elliott really wants – is to convince investors that it has a plan to improve profitability while also buying back stock, a strategy that has not been used by airlines for several years.
and WN has increased pay for its employees and it is labor cost increases which have been the biggest drag on the industry…. given that UA says that it is expecting labor cost increases to moderate in 2025, they are not expecting any large settlements with any further labor groups which is probably not what their FAs want to hear.
Sorry, Tim, I’m not trying to fact-check you. However, for an apples-to-apples comparison, you should exclude the refinery.
Delta agrees with you that the refinery should be excluded for adjusted numbers to provide a comparison with other airlines but the refinery is part of DL’s business and has to be reported as part of DL’s bottom line GAAP financials.
For the MRQ, DL’s adjusted operating margin was 9.4% but, again, DL took a hit of about $500 million in revenue and a hit on margin as a result because it increased labor costs based on revenue it could not obtain.
and the difference besides the fact that DL and UA do not have apples to apples labor costs because UA has not settled w/ its FAs is the gain/loss on investments which is a notable difference between the two.
despite the notion that DL is the airline that invests in money-losing airlines, UA recorded a loss on investments while DL saw a gain and a hefty year to year swing.
Like the refinery, all of that stuff matters to the bottom line – just as much as WN’s fuel hedging strategy is included in its bottom line results. We all love to pick and choose the metrics and timeframes that matter to us but Elliott and the institutional investors that own the majority of the US airline industry are not swayed by cherrypicked numbers and really don’t have a bias on specific carriers.
Elliott is after making money and saw an underperforming company to come after; there are more than a few people that believe UAL’s stock buybacks are driven by the fact that it is still worth just 2/3 as a company of what DAL is worth. UAL has a lot more cash than DAL in part because United expected to spend big on airplanes while DAL has long been focused on low cash and strong credit which minimizes the risk of being a takeover target. UA does not want to be in WN’s shoes. Like WN, UA has a massive order book and the ability to cut capex if it has to.
I enjoy good interactions with clearly-informed people like you.
Thank you, Tim, for sharing your views. I really enjoyed our conversation and appreciate the great insights you provided.
Great summary Cranky. I also don’t understand the plan. At all.
Southwest offered Elliott to provide recommendations for 3 of the 6 new board members and Elliott declined. They want total control, nothing less. Elliott owns a little more than 10% stock, but wants majority control of the Board (8 of 12) and therefore the Company. How does that math work? If you want to control a company, you should buy majority control. The bullying with 10% ownership stake is obnoxious.
I hope other shareholders do not go along with Elliott. They have provided no plan, no details of what they would do differently should they take control of the company. Very curious what their aim is—why do they want control?
> Very curious what their aim is—why do they want control?
It’s pretty clear that they want control so that they can replace Bob Jordan as CEO.
Can you recommend and decent longform articles on “Robert Milton …. is a financial engineer who split Air Canada into various pieces that took years to fix. “
I’d like to know more about this.
The key search term is “ACE Aviation Holdings”. Long story short, post 2004 bankruptcy, Air Canada got split into many pieces under ACE, including Aeroplan, the main Air Canada, Jazz, Cargo, and Ground Handling, along with a few other pieces. This got messier and messier, with Aeroplan eventually being sold off entirely and it really did not work out. Only in 2024 did ACE finally cease to function, and it took a consortium of banks to help Air Canada rebuy Aeroplan (which is also why Air Canada credit cards are so aggressively promoted).
Good summary. Here’s an article I like:
https://www.thestar.com/business/robert-miltons-legacy-up-in-the-air/article_fe81b6c5-85b7-5732-84d4-b46330e72cdf.html
If I were a SWA investor, I see this as a Carl Icahn play similar to TWA. He’s going to go in, drive per share value much higher than if SWA were running itself, and then exit out. And I would be there with him. Let me make a huge gain quickly and then sell. Who cares what happens afterwards to the company. I have my profits.
I am also a former TWA employee and was massacred by what Icahn did. It still is painful to think about it.
Can’t see how Gregg Saretsky fits in to this. WestJet started out as a lo-cost Southwest clone. Over the years they became more and more like Air Canada. Which was great news for Air Canada. So if Southwest wants to look like United, Gregg’s your man.
Glad to hear Bob Fornaro joined the board at Southwest. I had the pleasure of meeting him when
I was at AirTran during a couple of meet and
greets with employees in ATL and MCO along with the CEO at the time, Joe Leonard. He is definitely an interesting guy for sure.
Scott Galloway has a great quote about who makes up boards, and I feel it is appropriate here. FIP’s: Formerly Important People
I think there are enough breadcrumbs here to figure out what the real plan is.
Elliot obviously wants to make some short-term gains, increase the numbers on the balance sheet, and then sell and get out and make a bunch of money.
Southwest said we can update things… But they still primarily kept what they think is important. They did not go to a bunch of ancillary revenue, and most importantly they didn’t start charging for bags.
I think the Elliot people would like to turn Southwest into Ryanair in the US. I really do. I think they look at the two, and they see two large airlines that mostly go after cheaper flyers and have a single Boeing fleet.
I also think that when Southwest refused to do that, to go all the way to that model, they came to this. They want to run the board off, and put in people who will try to turn it into Ryanair US.
That’s not to say they have any idea that it would actually work. But that’s what they’re trying to do. They figure the size of the airline will give them what frontier and spirit don’t have, namely, economy of scale.
They want to turn it into a massive ULCC,
It seems like all the airlines in the US (ULCCs, Southwest, and legacy network carriers) are converging to basically the same set of offerings:
– “Basic economy” tier with no assigned seat and minimal flexibility. May or may not include a carry-on bag, depending on carrier.
– “Standard economy” with an assigned seat, a carry-on bag, and some additional flexibility.
– Other nice things (priority boarding, checked bags, nicer seats) offered as buy-ups or perks for frequent flyers and credit card holders.
Spirit and Frontier moved to this approach with their recent change to bundled fares. The mainlines got there by adding Basic Economy. Southwest is getting most of the way there with their assigned seating plan, which makes Wanna Get Away fairly similar to Basic Economy.
I don’t see a huge difference between ULCCs and other airlines on fares or service model anymore. The biggest difference is network strategy – ULCCs are willing to fly sub-daily point-to-point routes with minimal connecting options, while Southwest mostly flies at least daily, with connecting options providing redundancy.
Everyone is a “massive ULCC” to some extent at this point.
I largely agree with what you’re saying.
IMHO one of the best moves that the legacy airlines did was to create basic economy fares and use those to compete against ULCCs for the lower paying pax that the legacies still need. WN’s latest move, as you point out, simply gets it more towards that somewhat standardized offering of options.
I’m far from an expert, but my assessment of Elliott’s list of candidates is “great, a lot of them had leadership positions in airlines 10-20 years ago.” How you run an airline *might* have changed in the last 5-10 years, let alone since most of these folks were in their airline roles. I just don’t see a lot of relevant value in these candidates or this attempt. The whole things seems prideful, personal and short-sighted on Elliott’s part.
Brett,
Put your shoes in the random stock market investor : do you think they care about the business of the company they invest in ? Most of them will just look at the capital gain and/or revenue they can get out of the shares (depending on wether they plan to cash out at one point or need the regular cash-flow.
Someone coming in promising them a 2x return in one year is way better than a plein to double the value in 5 years, as long as there is enough liquidity to sell in one year !
So the success of Elliott board lies not in what SW board has already done, but to how much do the long term vested interests (employees, management, pension plans, …) control and how much true stock exchange owners are believing the promise !…
Christophe – This isn’t about random stock market investors. The vast majority of Southwest’s stock is going to be held be institutional investors. They aren’t usually playing the day-trading game.
Elliott appears to be the modern day version of what Carl Icahn did to TWA. What’s unfortunate is that all of this boardroom drama ends up being a big distraction from being able to focus fully on the transformation soon to come, and leverage for short term financial gain the decades of the culture Southwest employees have built. If only Herb was still around…he would take no prisoners.
Q: “Why would these board candidates put themselves out there, especially the airline industry people like Gregg who are probably burning bridges by doing the bidding of an activist investor?”
A: $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Elliott Management is predatory. They are non-transparent in their own pricing models. In multiple cases they have taken “MONTHS” to move funds across accounts costing clients millions yet continued to collect its own high management fees. Elliott was instrumental in the destruction of the Argentinian economy and wiped-out Argentine pension funds – to the tune of 2 billion Dollars. Additionally, there are multiple sites that all say the same thing. Their activist targets underperform. Bottom Line Up Front. anybody can write a bio to look like a rock star. Actions matter and looking at the background of where those board selectees came from should give no one any confidence in their capabilities. Take some time to look at their previous work history. Elliott has no idea on how to fix SWA.
CWA and the Strategic Organizing Center’s Investment Group (SOC Investment Group) published a report in 2021 that exposes the long-term harm of Elliott Management, one of the world’s largest activist hedge funds, to companies it targets with its predatory tactics, like AT&T and Frontier Communications. The report also shows that Elliott harms the pension funds that invest with the hedge fund, underperforming less risky public market investments and creating a risk of over-diversification.
activist_hedge_fund_risks_to_pension_funds_case_of_elliot_mgt_sept_2020_socig_and_cwa.pdf (cwa-union.org)
“I don’t think I’ve ever heard Bob Jordan say he’ll “never” do something. In fact, I’ve heard him say more than once that you never say never. ”
I feel like Southwest has stated that they will never charge for bags? I don’t know if Bob Jordan said it or if Gary Kelly said it or if it was just a Southwest mantra, but to my recollection, Southwest’s stance on charging for bags is; “Southwest will never charge for bags” (“Bags fly free” is the commercial and/or motto…right?)
So when Gregg Saretsky says; “That would be my advice to folks from Southwest, is: Keep an open mind. The things that you said you would never do, you probably will at some point.”
I take that to mean Elliot may be [in-part] going for bag fees. Just my two cents worth on Elliots possible motivation/plan to “make its money and get out”.
“Do the things they would never do…”
He means, layoffs, outsourcing. Typical corporate degradation tactics that make investors more money, who are already rich, and damage the employees, and customers.
Don’t know why they’re sugar coating it.
Cranky, I think you’re completely underestimating the odds of Elliott being successful with their plan. If they own 10% of the company, they only need slightly less than half of the other investors to support them in order to get a majority. Most investors don’t care about the culture or the employees or anything else except profits. Unless they have stock that cannot be sold for a certain time period, there is no reason for any investor to oppose Elliott’s plan unless it is for sentimental reasons.
A lot of posturing on both sides. Bloomberg is reporting this evening, “Elliott, Southwest Airlines to begin settlement discussions.” Seems there will be some compromise agreement to avoid a proxy fight. With SWA at it highest stock valuation since Elliot invested in June, I wonder if Elliot is looking for cash out soon.
I saw that as well. I think he realized he wasn’t going to get full control and this way is likely to get out with some profits and move on to the next company he can screw. And yeah, some companies need an overhaul but while Southwest has its issues, it still is pretty solid and fairly well liked.
Technology, assigned seats and improved reliability are the biggest issues for me. Charging for bags makes no sense unless they lower the airfare since their fares are higher than competitors in most cases.
The plan reads like someone took a look at Joyce’s tenure at Qantas, said “Give me that but more so”, and intends to in effct turn SW into a reverse mortgage converting any value in the company into cash for shareholders over about 10-15 years at the expense of creating a valueless dumpster fire.
Joyce got away with it because Australian corporate culture thinks governance is a small marsupial from Madagascar, and our non-competitive economy and inbred advantage for incumbents means any Australian company with a dominant market position could literally urinate on its customers and still retain market share with government assistance, including provision of sparkling beverages at government expense to keep the piss flowing.
My understanding of the US airline market is these two factors may not be as strong, hence I too am perplexed, but maybe after so many years of our country steadily becoming like the USA, in all the bad ways, you are going to return the favour?