DALLAS — Southwest Airlines on Thursday raised its third-quarter revenue forecast, announced its board of directors authorized $2.5 billion in stock buybacks and detailed a series of changes to its business model as it seeks to fend off activist Elliott Investment Management.
The airline said it expects unit revenue to rise as much as 3% in the third quarter from the same period last year, compared with a previous forecast for a decline of as much as 2%.
The airline also said it would bring on Bob Fornaro, a highly respected industry veteran who previously led Spirit Airlinesto its board of directors. Southwest and Fornaro have known each other for more than a decade. He served as CEO of AirTran, the airline Southwest merged with in 2011, and was a consultant to Southwest after the merger.
Southwest executives will present their vision for the company's future at the airline's headquarters in Dallas on Thursday at a presentation for investors. Chief Executive Bob Jordan and other top Southwest executives are under increasing pressure from Elliott, who has called for a leadership change at the airline.
Southwest executives will be trying to convince investors that it is on track to boost profits and revenue. Over the summer, the airline unveiled sweeping changes to its more than half-century-old business model, including assigned seating and extra legroom, that could generate more revenue for the airline.
In its filing Thursday, Southwest stood by its longstanding policy of allowing customers to check two bags for free, saying it “generates market share gains that outweigh potential revenue lost from baggage fees.”
A day earlier, Southwest told staff it will cut service to Atlanta next year and may lay off more than 300 flight attendants and pilots in the city in an effort to cut costs.
Earlier this month, Southwest Chief Executive Gary Kelly said he would step down from his post at the end of next year. Elliott later told Southwest’s mechanics union that he still wanted a leadership change at the top of the airline. The company did not immediately comment on Southwest’s strategy presentation it released Thursday.
— CNBC Rohan Goswami contributed to this report.
