By David Shepardson
WASHINGTON (Reuters) – Southwest Airlines (NYSE:) CEO Bob Jordan said on Wednesday he will not resign as the air carrier faces pressure from activist investor Elliott Investment Management, with it already considering amendments to its open-seating policy and other potential changes.
“We want to understand what their ideas are, they may have great ideas,” Jordan told reporters in Washington after an event. “At the end of the day, we are going to treat Elliott like any other investor. We’ll sit down and listen to them…. Southwest is a great company. We have a great plan and will execute.”
Elliott on Monday called for leadership and board changes at Southwest 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.
“I have no plans to resign,” Jordan said, a 36-year veteran of Southwest.
Jordan also said Southwest, which had expected to get 80 airplanes from Boeing (NYSE:) this year, now only expects to receive 20 and does not expect to begin using the smaller MAX 7 – which is still awaiting certification – until 2026.
“We support Boeing doing the work to get better… Because a better Boeing is good for us for decades. We need Boeing to be very solid,” Jordan said. “I’m not happy with the delays.”
Jordan will meet with the head of the Federal Aviation Administration later on Wednesday to discuss Boeing. He visited Boeing supplier Spirit AeroSystems (NYSE:) on Friday where a lot of quality issues have arisen and plans to visit Boeing again in two weeks.
Jordan said the Elliott plan “is fairly light” on proposed changes. He added that he had heard Elliott could propose bag fees but Southwest said its customer data shows that nearly 50% of its customers pick the airline because of its no-bag fee policy.
“You’ve got to be very informed before you start proposing changes that affect the business model of Southwest Airlines,” Jordan said. “Elliott is not directing the company.”
Jordan told reporters the airline would not stagnate, reiterating Southwest is considering changes to its open seating policy and potentially adding premium seating or extra leg room seats.
“If customer preference tells us we need to evolve, we will evolve. You cannot be stubborn about change,” Jordan said.
“At the same time we’re going to stick to our values and our values say, ‘We treat people right. We have the best policies, we have the best people, we operate well’ – outside of that everything could be on the table.”
Southwest plans to unveil a “very broad plan” at an investor day in September, Jordan said.
