A Southwest commercial airliner takes off from Las Vegas on February 8, 2024.
Mike Blake | Reuters
Southwest Airlines Chief Executive Bob Jordan said the company is ready to adapt to changing customer trends, such as premium seating, as pressure mounts from an activist investor.
“We will adapt as our customers' needs adapt,” Jordan said at an industry event hosted by Politico on Wednesday.
Jordan's comments came two days after hedge fund Elliott Management disclosed a $1.9 billion stake in Southwest and said the airline needs a new CEO and president.
Jordan told investors in April that the airline is considering major changes to its product, potentially abandoning its unassigned seating system that has made the Dallas-based carrier stand out among airlines, and even reevaluating its single class of service. .
Jordan reiterated those considerations Wednesday, saying the airline, which began flying in 1971 and now carries more passengers in the United States than any other, is in its “third generation.” He said the airline's leaders are open to big changes to boost revenue, while rivals such as Delta and United Take advantage of customers willing to pay more for a seat with more space or other benefits.
Elliott did not immediately respond to a request for comment on Jordan's comments Wednesday.
Southwest said Monday in response to the activist campaign that its board of directors supported company leaders and the company's strategy, while it also “looks forward to further conversations with Elliott.”
Southwest has struggled with weaker margins than some of its competitors as it faces increased U.S. air capacity, changes in post-pandemic travel patterns and a growing problem beyond its control: delays on new planes from Boeing, its sole supplier of aircraft, while that company faces several manufacturing and safety crises.
Southwest had also taken months to find its footing after a year-end holiday crisis in 2022 cost it more than $1 billion. The company later acknowledged that its technology could not handle the hundreds of flight and crew changes it caused. by a winter storm, forcing him to quickly upgrade his system.
Meanwhile, Jordan said Southwest has continued to work to improve the customer experience. It has improved its onboard Wi-Fi and added power outlets to its fleet of boeing 737 in recent years.
“I think customer preferences go beyond that,” Jordan said Wednesday. The airline has spent months surveying customers to determine what changes are necessary, he added.
“It has been several years since we last studied this in depth, and customer preferences and expectations change over time,” an airline spokeswoman told CNBC. “We are also studying the operational and financial benefits of any potential changes.”
— CNBC's Rohan Goswami contributed to this article.
