Elliott Investment Sinks $2B in Southwest Airlines, Pushes for Change

Southwest Airlines has received a $2 billion investment stake from the activist investment firm Elliott Investment Management, which says it is working to implement major changes in the underperforming airline.

According to the Wall Street Journal, these changes are meant to push the discount airline’s shares, which are underperforming by 4% this year alone. The investment firm, led by Paul Singer, says that it will engage with Southwest Airlines’ upper management to address the airline’s shortcomings.

Elliott Investment has previously turned around other fledgling companies, including Crown Castle, NRG Energy, and Goodyear Tire & Rubber. The firm is noted for replacing company CEOs.

Reuters reports that the investment firm said in a letter to the airline’s board, “We believe that new leadership is required at Southwest.” The company indicated that the airline’s poor results have been caused by Southwest’s “poor execution” and its leadership’s “stubborn unwillingness” to update the company’s strategy.

Southwest Airlines has been facing issues ever since the start of the COVID-19 pandemic, with a critical nadir being hit in 2022 after its outdated technology systems couldn’t effectively handle a large-scale disruption. The airline, which began in the 1970s, quickly became popular due to its stellar customer service and competitive fares, generating nearly 50 years of consecutive profits before 2020.

Earlier this year, Southwest Airlines announced that it would begin offering “red-eye” (overnight) flights to select cities.

According to Ryan Green, chief commercial officer, the airline intends to start offering overnight flights from Hawaii and Las Vegas. Green acknowledged that there are still problems for the airline to resolve before the flights start. There might be 50 red-eye flights each day, and the airline “hopes to get them in the air in about two years,” according to The Washington Post.

More recently, Southwest Airlines began including its flights in Google Flights searches. The airline had previously blocked its fares from showing up in searches on Google Flights and online travel aggregators like Expedia.com. On May 22, however, Southwest’s rates were made available on Google Flights alongside those of other airlines for the first time.

According to Thrifty Traveler, the airline preferred customers to book flights directly on its site. This is still the case; in order to complete their travel arrangements, aggregator users will be sent to the website of Southwest Airlines. But thanks to this change, anyone on the lookout for a good deal may now explore tickets on Southwest Airlines in addition to other airlines, allowing them to select the option that best suits their budget.