Elliott Statement on Southwest Airlines' Revenue Guidance Reduction

Rhea-AI Summary

Elliott Investment Management has released a statement regarding Southwest Airlines' (NYSE: LUV) recent revenue guidance reduction. This marks the eighth downgrade in the past 18 months, with the current guidance expecting a decline in revenue per available seat mile (RASM) by 4% to 4.5% for Q2. Elliott criticized Southwest's management for their inability to adapt to the modern airline industry, stating that despite promises for improvement, the company continues to underperform relative to its peers. Elliott emphasizes the urgent need for significant leadership changes to address these ongoing issues.

Positive

• None.

Negative

• Southwest Airlines announced an eighth revenue guidance reduction in 18 months.
• RASM is expected to decline 4% to 4.5% for Q2.
• Southwest's performance continues to lag behind industry peers.
• Elliott highlights management's failure to adapt to modern airline industry complexities.

WEST PALM BEACH, Fla., June 26, 2024 /PRNewswire/ -- Elliott Investment Management L.P. ("Elliott"), today released the following statement on behalf of Partner John Pike and Portfolio Manager Bobby Xu regarding Southwest Airlines Co. (NYSE: LUV) (the "Company" or "Southwest") and its revenue guidance reduction announcement:

Today's announcement marks the eighth guidance reduction at Southwest Airlines in the last 18 months with RASM (revenue per available seat mile) now expected to decline 4% to 4.5% in the second quarter, a significant reduction relative to the guidance that Southwest's management team provided only two months ago. Southwest's industry-trailing revenue performance is clearly continuing along the same disappointing trend line, despite management's repeated promises for improvement and today's empty statement that the Company is focusing on "delivering operational excellence."

Southwest is led by a team that has proven unable to adapt to the modern airline industry; the Company's release today seems to admit as much by stating that the revenue guidance reduction was the result of "complexities in adapting" to the current environment — complexities that Southwest's peers seem able to adapt to. Unfortunately, this is yet another example that fundamental leadership change is urgently needed at Southwest. Elliott is committed to delivering the leadership changes that the Company requires.

For more information about Elliott's investment in Southwest, please visit StrongerSouthwest.com.

About Elliott

Elliott Investment Management L.P. (together with its affiliates, "Elliott") manages approximately $65.5 billion of assets as of December 31, 2023. Founded in 1977, it is one of the oldest funds under continuous management. The Elliott funds' investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of the firm. 

Media Contact:         
Casey Friedman                                             
Elliott Investment Management L.P.                                     
(212) 478-1780                                              
cFriedman@elliottmgmt.com 

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SOURCE Elliott Investment Management L.P.

FAQ

What did Elliott Investment Management say about Southwest Airlines' recent revenue guidance reduction?

Elliott criticized Southwest Airlines for its eighth revenue guidance reduction in 18 months and highlighted the company's inability to adapt to the modern airline industry.

How much is Southwest Airlines' revenue per available seat mile expected to decline?

Southwest Airlines' revenue per available seat mile (RASM) is expected to decline by 4% to 4.5% in Q2.

Why is Elliott calling for leadership changes at Southwest Airlines?

Elliott is calling for leadership changes at Southwest Airlines due to the management's repeated failures to improve revenue performance and adapt to the industry's complexities.

How does Southwest Airlines' performance compare to its peers?

Southwest Airlines continues to underperform relative to its industry peers, as noted by Elliott.