A Southwest commercial airliner takes off from Las Vegas on Feb. 8, 2024.
Mike Blake | Reuters
Southwest Airlines CEO Bob Jordan said the company is ready to adapt to changing customer trends like premium seating as pressure from an activist investor mounts.
“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 carrier needs a new CEO and new chairman.
In April, Jordan told investors that the airline is considering major changes to its product, potentially ditching its system of unassigned seating that has made the Dallas-based carrier a standout among airlines, and even reevaluating its single class of service.
Jordan reiterated those considerations Wednesday, saying that the airline, which started 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 shifts to increase revenue, while rivals like Delta and United capitalize on customers willing to pay up for a seat with more space or other perks.
Elliott didn’t immediately respond to a request for comment about Jordan’s remarks on Wednesday.
Southwest on Monday said in response to the activist campaign that its board backed the company’s leaders and the airline’s strategy, while it will also “look forward to further conversations with Elliott.”
Southwest has struggled with weaker margins than some of its competitors as it faces increased airline capacity in the U.S., shifting post-pandemic travel patterns and a spiraling problem that is out of its control: delays of new planes from Boeing, its sole aircraft provider, as that company grapples with several manufacturing and safety crises. The airline expects to receive just 20 Max jets from Boeing this year, down from an earlier forecast for close to 80 new planes.
Southwest had also taken months to find its footing after a year-end holiday meltdown in 2022 cost it more than $1 billion. The company later acknowledged its technology couldn’t handle the hundreds of flight and crew changes triggered by a winter storm, prompting it to quickly upgrade its system.
Meanwhile, Jordan said Southwest has continued to work toward improving the customer experience. It’s upgraded its inflight Wi-Fi and added power outlets on its fleet of Boeing 737s in recent years.
“I think customer preference is going beyond that,” Jordan said Wednesday. The carrier has spent months surveying customers to figure out what changes are needed, he added.
“It’s 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 change.”
— CNBC’s Rohan Goswami contributed to this article.
