Southwest Airlines has had a rocky fewer quarters, acknowledgment to respective wide delays and cancelation events, and now it's not conscionable nan disgruntled customers who are nary longer loyal.
A awesome finance patient is taking a immense liking successful nan bearer and demanding that changes beryllium made, starting pinch leadership.
Elliot Investment Management, which announced a $1.9 cardinal liking successful nan Dallas-based hose connected Monday, penned an unfastened letter to Southwest's Board of Directors urging shareholders to ballot to alteration nan airline's executive activity and return operations successful a different direction.
Related: 'Completely Unacceptable': Southwest Delays Thousands of Flights Due to 'Technological Issue'
"Poor execution and leadership's stubborn unwillingness to germinate nan Company's strategy person led to profoundly disappointing results for shareholders, employees, and customers alike," nan missive reads. "In summation to antagonistic returns for shareholders, this disappointing financial capacity has costs each frontline worker tens of thousands of dollars connected mean successful nan shape of reduced worker profit-sharing and declines successful nan worth of Southwest banal held by worker status plans."
The patient added that it believes Southwest has "the astir compelling hose turnaround opportunity" successful nan manufacture and outlined a three-pronged strategy for shareholders to consider: heighten nan Board of Directors, upgrade activity (preferably bringing successful leaders from extracurricular of nan company), and undertake a broad business review.
In doing so, Elliot predicted, Southwest could scope $49 per stock wrong nan adjacent 12 months, which would beryllium a 77% return.
Related: 'It Will Never Happen Again': Southwest Airlines CEO Says Last Christmas' Disaster Is successful nan Past
"While Southwest has a proud history, that history is not an statement for supporting mediocre activity and sticking pinch a strategy that nary longer succeeds successful nan modern hose industry," nan missive said.
Southwest responded to nan finance firm successful a letter of its own, noting that nan institution was "carefully reviewing" Elliot's missive and that it plans to uncover much astir its forward-looking strategy during Southwest's Investor Day successful September.
"We are assured that Southwest Airlines has nan correct strategy, nan correct plan, and nan correct squad successful spot to thrust semipermanent worth for our Shareholders," Southwest said.
Southwest rattled customers past period aft thousands of flights were delayed owed to an soul "technological issue."
It was nan latest snag for nan airline's operations arsenic it looks to trim costs.
The hose had a rough 2023 overall, pinch a nett nonaccomplishment of $219 cardinal successful Q4 owed to a disastrous vacation play that near thousands of passengers stranded, delayed, aliases pinch canceled flights.
Related: Southwest Airlines makes large operational changes aft 2024 financial report
"We person not yet delivered connected our financial targets," Southwest CEO Bob Jordan said successful an net merchandise astatine nan time.
Southwest was down complete 10% twelvemonth complete twelvemonth arsenic of Tuesday day and dropped astir 5% successful a 24-hour play aft nan merchandise of Elliot's letter.