Hedge fund's bid to control Southwest Airlines reaches critical mass
FILE: A Southwest Airlines plane takes off from San Francisco International Airport on June 8, 2023.
In the latest aviation news, a Florida hedge fund demanding big changes in Southwest Airlines’ operations says it now has enough voting stock in the carrier to call a special meeting of shareholders as it seeks to install its own board; United is said to be weighing a change in its in-flight Wi-Fi to use Elon Musk’s Starlink satellites; Delta expands its popular Delta Sync in-flight entertainment system; Alaska Airlines starts streaming college football games on Saturday flights; Delta introduces a premium economy section on LAX-JFK flights; American plans to add new routes to Europe next summer; more international route news comes from Korean Air, French Bee, Norse Atlantic, Delta and JetBlue; the Biden administration’s Transportation Department has a new target for consumer protection — loyalty and credit card programs of the four largest airlines; Lufthansa has its eye on TAP Air Portugal as the Portuguese government plans to privatize it; Dallas Fort Worth International Airport begins a $3 billion reconstruction of its Terminal C, and Denver International installs facial recognition technology at 15 gates for international passengers.
The pressure campaign by Florida-based hedge fund Elliott Investment Management against Southwest Airlines is coming to a head. As Elliott executives are due to meet with Southwest officials on Sept. 9, the investment firm said this week that it has now increased its stake in the airline to 10% of its voting shares by converting some derivatives that it held into common stock. That gives Elliott the right to call a meeting of other shareholders to present its case. Elliott’s main objective in calling a special meeting would be to stack the Southwest board of directors with its own hand-picked candidates; the firm recently announced a roster of 10 individuals it wants to put on the airline’s 15-member board. With a board majority, the hedge fund could presumably pursue its second priority: getting rid of Southwest’s top executives, including Gary Kelly, the former CEO who is now executive chairman of the company’s board of directors, and current CEO Bob Jordan.
On the day Elliott announced that it had reached the 10% threshold, Southwest’s stock price jumped by 3%, according to MarketWatch. The hedge fund reportedly wants to see changes in the airline’s business model that would create new revenue streams to increase profitability and drive up its share price. Southwest has already said that it plans to make two big changes in the months ahead: adding a premium seating section to its aircraft and adopting assigned seating, both of which could increase passenger revenues. The airline has promised to reveal details of its planned operational changes at an Investor Day on Sept. 26, but so far, Southwest has not said anything about revising its longstanding policy of two free checked bags — although as we noted last week, the airline is said to be polling its customers about possible revisions to that policy.
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In this photo provided by SpaceX, a rocket carrying 21 Starlink internet satellites launches from Cape Canaveral, Fla., on Wednesday, Aug. 28, 2024.
United Airlines could soon announce a major overhaul of its in-flight Wi-Fi product, according to leading aviation blogs. Industry speculation is that the airline might replace its existing service with Elon Musk’s Starlink satellite network. Observers note that although Starlink is in limited use by airlines at this stage, it gets great reviews. “Having seen Starlink perform first on JSX and more recently on Hawaiian I can say that it really is the best inflight wifi product by a lot,” wrote View from the Wing’s Gary Leff.
“Beyond faster speeds, it........
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