Southwest Airlines’ chief executive, Bob Jordan, has told employees in his company-wide mid-year update that the Dallas-based carrier is being ‘tested’ by rising oil prices caused by the ongoing conflict in the Middle East, but that big business changes forced through by activist investor Elliott have set the airline up to “navigate the environment we’re currently in.”
“I’m proud of what we have accomplished in a year that’s brought a lot of change and challenges outside of our control, including the impact of government shutdowns, the war with Iran, and much higher than planned fuel prices,” Jordan told employees.
“The airline industry is far more volatile than it was even just a few months ago. Fuel prices have risen sharply, and the cost pressures are changing how every carrier thinks about its business. Airlines are responding by adjusting schedules, raising fares, rethinking investments, and further sharpening their focus,” the memo added.
While Jordan didn’t lay out any specific changes to how Southwest might operate in the months ahead and in response to these pressures, he cautioned, “how quickly the industry can change.”
“The closure of Spirit Airlines was an especially hard moment for their employees and customers, and it also underscored for the entire industry just how real today’s pressures have become,” Jordan explained.
“The tides can turn quickly. You must remain vigilant, agile, and ready to adapt,” he continued.
Thankfully, Jordan claims that a change in business strategy forced through by Elliott when the activist investor managed to install its pick of five directors on the Southwest board is paying dividends.
Elliott’s thinking was that in order for Southwest to succeed and turn around its lackluster financial performance, it had to become a little less Southwest and much more like every other airline: More fare products, assigned seating, ancillary revenue streams, and a relentless focus on costs.
Jordan claims that the shift is “positioning us well to withstand the challenges we’re facing.”
“My philosophy continues to be simple: focus on what we can control. We can’t control fuel prices. We can’t control global events. And we can’t control the dynamics of the broader industry around us,” Jordan added.
Jordan also realizes that customers aren’t just buying flights based on low-fares alone. The entire experience matters, and that’s why he says the airline is still committed to installing Starlink in-flight Wi-Fi across the Southwest fleet, retrofitting aircraft with larger overhead bins, and installing new seats with fast charging capabilities.
But despite all this attention on turning Southwest into any other airline, Jordan says the airline has to “sharpen” what makes Southwest, well, Southwest. That’s essentially a call for employees to show up and keep on taking care of passengers… after all, if you are already paying workers, you want them to perform to the best of their ability.
