Elliott calls for leadership, board changes at Southwest Airlines after building $1.9 billion stake
) after reporting a stake worth about $1.9 billion in the U.S. carrier, saying the company needs fresh perspectives to compete in the modern airline industry.
Southwest's EBITDAR, a measure for financial performance, is expected to be nearly 50% lower than 2018 levels, Elliott said. It attributed the underperformance to"poor execution" and Southwest leadership's"stubborn unwillingness" to evolve the company's strategy. Jordan has had a tough ride since taking the helm in February 2022. A high-profile systems meltdown in the very first year of his term led to the cancellation of almost 17,000 flights, leaving thousands of passengers stranded and costing the company more than $1 billion.)'s ongoing safety crisis. Southwest has warned of a hit to earnings as it expects to receive just 20 Boeing aircraft this year, less than a quarter of the number it had anticipated.
To mitigate the impact, Southwest has accelerated plans to control costs and improve productivity. It is also reviewing its products and boarding policy.Southwest shares trade about 19.52 times their forward profit estimates, compared with United's 4.74 and the industry multiple of 7.19.
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