It's actually infuriating how when the topic goes to this subject, everyone is suddenly an expert on business, economics, and stocks. Just like they were experts on virology, Ukraine, and everything else depending on the season. I know enough about this subject to say most of the comments are nonsense drivel.
Please focus on plural vs. singular in your speech. An individual "does", many people "do", även om på svenska alla bara gör. Your English is otherwise remarkably good, but this is the one thing I catch now and then.
Similar to a private equity takeover, which happened to the company I work for. It went from being repeatedly voted one of the best companies in the U.S. to work for to being unable to hold on to its experienced workforce and barely fending off bankruptcy.
People keep saying that, but it is not true. The market is forward looking, management might not be but the market is always forward looking. There have been some great meta analysis on this lmk if you want.
Do you think it could be possible that Icahn might have the bloodstains of 230 people because of what he did to TWA? Would they have been able to start replacing their old 747s if he hadn't been so... Disgustingly greedy and deceptive?
@@OTRTraderTWA Flight 800 occurred 3 years after Icahn was ousted and involved a design flaw of the center wing fuel tank and associated*, not corporate shenanigans. Despite the accident NM it being TWA's fault, it still hurt them. * An exact reason for the explosion was not determined, but is thought most likely due to electricity conducted into the fuel tank through the fuel quantity measuring system.
@@TheOtherSteel No there was no design flaw in the tank, the flaw was in the fuel tank sensor level. The electrical wiring had deteriated badly, along with cracked insulation and more OLD wiring in the rest of the plane made it possible for a High Voltage short to enter the low voltage wiring and thus into the fuel tank where the now elevated voltage caused sparking in what was an other wise empty tank. To mitigate this kind of fault in the future the tanks were modified to allow inert gas to be pumped thru them, stopping fuel vaporising from heating (heat fuel it becomes a vapor, and that vapor is HIGHLY explosive), and filled the empty tank with a gas that could no aide in combustion, if a spark happpened now, nothing (in theory) would happen. To say the tank was fault is bollox, 15+ years of poor maintenance and at least 10 years of failed D-Checks were the ultimate caused, had the bad wiring been identified it would have been fixed sooner.
This hits me hard because I’ve been a loyal SWA frequent flier for decades (and stockholder). For a very simple reason. Southwest had (by a country mile) the best people working for them. They also looked at how we fly and all the things that were annoying and inefficient (like assigned seating) and scrapped it so they could offer cheap fares. A plane ticket to Las Vegas for $69 was unheard of until they came along! And for that kind of money, who gives a darn if you sit in the front or the back of the plane? They simply “got it” These guys at Elliot definitely don’t get it and like you said, they are nothing more than a big shot Wall Street “pump and dump” outfit and they will leave LUV in ruins. The simple truth is, the real bad guy is Boeing. One big part of SWA keys to success were they put all their eggs in the Boeing 737 basket. This saved them money in pilot/crew/maintenance training, certification and equipment compared to other airlines that had to juggle multiple plane types and makes. Boeing’s greed and sloppy MAX design program has sunk both companies. Elliot is just finding tricky (sneaky) ways to profit from all this.
At WORST... welcome to a moral lesson in what the love of money does to a people, if this is all that Elliot really cares about. At some point the pendulum will swing back to consideration of "human capital." However I would wish that Elliot would care about larger things. How do we keep SWA from sinking, no matter what the reason? And there's plenty that would be possible to that end. After all, it was SWA itself that decided that Airbus was a no-go, rather than being liberal enough to dual-train pilots and such. (And to be fair, SWA didn't know what had been lurking with Boeing.) All we lack is the willingness. Anything more would require the ability to reach over into Boeing itself and leverage reforms. But even Boeing seeing its best customers start to hedge their bets might hammer some sanity into them. Don't blame the mechanisms. Blame the players and their parochial games.
I think you are missing a point that Petter mentioned - choice. Many people (like me) don't want to slum it - I want and can afford a bit of comfort. I'm in Europe, so it's not exactly the same, but don't use LCC for that reason, only carriers than offer a premium experience of some sort.
I wish that Southwest hadn’t taken over AirTran because I loved their 717s and their routes, which both soon disappeared after the takeover. I haven’t set foot on a 717 since the merger. I think that Delta bought them and still fly some, but not anywhere I go on Delta. I’m sure that A220 jets will soon replace them, if Airbus can make them quickly enough.
I've said it many times but apparently nobody is listening at SWA - The backlog of 737s and Airbus models is immense. Their best bet is to make a deal with Embraer for the 195 series and make due. At half the price of a Max 8, it's also a smart move as their older planes need replacing soon - before the 737 Maxs finally start arriving.
So yet another company is starting to focus on shareholder value primarily. That's very bad news for employees and customers. And what such a culture can lead to, can be seen at Boeing.
Well in the case of SWA, without changes they were going to be bankrupt within a few years. They were complacent too long and their competitors took a ton of their market share.
Regardless of recent religiously-held political beliefs, the shareholders own the company. SWA has suffered greatly under their current leadership. Herb Kelleher would be ashamed.
Non-assigned seating, no checked bag fees, and ignoring the "rest of the industry" is exactly WHY I CHOOSE Southwest. They are welcome to change, and I am welcome to fly with someone else.
@@DarioCastellarinPeople rush onto the planes anyway, to try and get room for their carry-ons, because the other airlines have baggage fees. Before baggage fees, I never had as many issues with a carry-on. And carry-ons suck for boarding and deplaning.
Southwest isn’t the value it used to be. Not charging for bags or premium seating means they have to go up on their ticket prices to make up for the revenue. Where I live it’s sometimes the same price to fly on one of the legacy carriers.
"Activism" usually refers to the environmental good guys, it was shocking hearing it used with a negative connotation here. Is this actually normal financial terminology?
It always amused me that people invest their money a stock because they know they're not competent enough to actually start and run a company in the stock's industry. But the moment the stock value dips, they suddenly decide that they know better how to run a company in that industry.
@@solandri69 It's not always that simple, or even oversimplified. The investment may be the only practical way to get a foot into the arena. And it may not be even the value dip as a financial reason, but as a sign of trouble that the investor is concerned about and wants to see reform come to. (I should not say that this is the case in THIS particular situation.) It really depends on the angle.
@@sailorman8590 Logistic shipping compannies road/rail/sea/air, transport sector are cyclic, geopolitics als affect them alot. Just look at what happend with the transport costs of a 40 feet shipping container when the containership Ever Given blocked the Suez canal and the pirate attacks in the waters for the coast of Somalia. At first containerships were mothballed due to low prices and a short while later shipping costs went truh the roof.
Gordon Bethune, former CEO of Continental Airlines used a pizza analogy. He said you can cut some things here and there and cut costs, but if you cut too much, you haven't got a pizza anymore.
@@philiphumphrey1548 DEI had nothing to do with Boeing’s weakness. Jack Welch aclolytes did. DEI has nothing to do with having moved away from engineering, if anything DEI candidates are more focused on things other than stock value. Cost cutting and socialization of risk while privatizing profit is a very white male particularly English male thing to do which is to say what went wrong at Boeing is the opposite of DEI.
@@jimallen8186lmao socializing isn't a white male thing. Most proponents of socialism are Jewish or some other non-white. DEI hires are concerned with maximum pay check for minimal work and minimal qualifications. They skate by and fail upwards constantly.
@@philiphumphrey1548 DEI has nothing to do with that, stop spreading such Fox News myths that are usually regurgitated by Elon's twitter account. Boeing was gutted out because it became totally focused on Wall Street satisfaction, At all costs they had to jack up the share price. Boeing's downfall was 100% caused by letting the management of McDonnel Douglas become the management of Boeing during the merger. MD management was purely share price focused and Boeing was engineering focused, Because they knew a well engineered product made money, just not as much as a purely cost focused operation.
This is the sheer irony of an "activist" investor coming from outside and pretending that they can fix a company. I have seen this countless times in my time in tech sector. It never worked out well because all the "activist" is after is ROI over 5 years.
They'll be a clone of Delta and United... anyone wanting that "treatment" already flies with those airlines. They need to leave Southwest alone because they are by far the best EXACTLY AS THEY ARE! "If it's not broken don't fix it!" is an adage for a reason. It is the economy that is broken--not Southwest Airlines.
The problem is that most of those activist investors are only interested in short-term performance. Meaning they don't care what happens after they've sold their shares. So sure Southwest might improve its stock evaluation but what happens after that? Removing seats from a plane doesn't magically make it smaller and more fuel efficient. Nor does it reduce maintenance overhead. Not to mention charging more for "premium" seats just moves them closer to the already pretty close competition. Innovation doesn't mean just barely doing everything everyone else does 😶
This is my thought too. They're okay with anti-consumer practices. Because all they need to do is make the stock price artificially go up sell off their stocks and then if Southwest or any other company that they do this to crashes and burns afterwards even to the extent of going bankrupt from angering their customer base they don't care because they already made their money.
Considering that our transportation system is so privatized. And this kind of anti-consumer behavior destroys transportation companies. I feel that the government has a right to step in and better regulate how this is working on the economic side.
@johnmckeon4498 i do not understand this argument. Because X sector is private and anticonsumer, the government should step in. Do you mean government should take over, directly or do you mean regulation? Would you make the same argument with other economic sectors, say tech or agriculture? I think I've followed the premise but not the conclusion. Could you please elaborate.
@@pyrpoi Do you mean government should take over, directly or do you mean regulation? => Both are fine, and both have their pros and cons. Case by case basis Would you make the same argument with other economic sectors, say tech or agriculture? => Yes, any sector of the economy that's so highly privatized and blatantly anticonsumer and antiworker, to the point entire companies and all their employees (plus consumers of that company) get screwed over because of a few rich guys that want to be even richer should be more regulated and/or directly intervened. Hope that answers your questions!
Thank you so much for this “expose” of Elliot! As a frequent customer of SW Air, I have noticed slight changes and wondered WHY? The insidious chicanery of some of these investors affects the unsuspecting clients/passengers. You are a ray of sunlight! Thx!😊
Your comment is extremely anti-semitic . Read your Bible, who are the G-d's chosen people? Spoiler Alert: NOT YOU! They are CHOSEN BY G-D TO RULE THE EARTH! .. So stop being anti-semitic, learn your place and mind your own business. Study (in schools) or work, watch sports, buy, take loans, pay taxes, vote Left or Right and MIND YOUR OWN BUSINESS!
Well the old management managed to tank the stock before the outside investors got involved. If they don't want outside investors to meddle then they should mange the company competently.
I hate the whole activist movement. Just because a single individual or entity has enough money to buy a chunk of a bus, doesn’t make them experts in running a company. A hedge fund bought the pharma company I retired from and they recently cut many long time employees. The company was already very profitable.
They wouldn't be running the company. Only nudge it in another direction. All they have to do is to persuade the other shareholders. As in any election.
won’t be profitable for long; will be split into entities so as to more easily shell costs upon one entity that can go bankrupt while siphoning value through another entity. All part of the privatize gains socialize costs movement.
well, if companies want to be insulated from stuff like this, then they should not allow themselves to be publicly traded otherwise it’s wide-open hunting season because that’s the way the system works.
What? They’re just like any other airline except their on time performance is fifth best behind the big 3 and Alaska. Not something to brag about for a company that only knows how to fly one type of plane.
Assigned seating sounds like a basic "feature" to me. I didn't even know that airlines existed where you just seat wherever. I can imagine people pushing and shoving to get some seat, arguments breaking out.
I've been a longtime Southwest customer but the assigned seating thing is a dealbreaker. I can't count the number of times other airlines have reassigned my seat to a middle seat.
The lack of assigned seats, lack of classism with their seating, and free checked bags is 90% of the reason I fly Southwest. I like that their planes board faster because they don't load the plane inefficiently. The lack of business class seats means everyone is treated the same. These parasites, if they succeed, are going to ruin everything good about SWA.
SWA has bigger problems than stock price right now, they are losing money. As an already lean operating company offering a mostly few frills product, they can't cut their way out of this, they have to improve the product and win back market share. I'm someone who used to fly SWA myself, but the free for all seating and not being substantially cheaper than competitors had me switch to United for most of my domestic flights and I live in a city that is both a United and SWA hub.
No assigned seating and no fees for checked bags are features not bugs IMHO. They’re the primary reason we have flown Southwest for many decades. They are some of the things that differentiates them from other airlines.
I watch a UA-cam account called Bright Sun Films that makes videos on big companies that have gone bankrupt in the past. Easily 90% of the stories all have one thing in common before they went bankrupt: some kind of investment management company did to them what Elliott is doing to Southwest...
@@miramichi30 True, but they love to get involved when business is good enough. Then they strip away everything they can and make a quick exit with as much value as they can carry, leaving everything else to die. That's why sane people call them what they are: corporate vultures.
I was a stock trader for a good 10 years. This situation is actually pretty uncommon. Maybe that channel is deliberately searching for those stories since it riles people up.
@@LoremasterYnTarisTell me you know absolutely nothing about stocks without telling me. A profitable company is worth so, so many more times than the value of just liquidating a company.
Southwest has been my favorite for decades. Part of what I like is that they're not like the rest of the airlines. They don't try to bullsh!t their customers. The fact is that an airline passenger is ultimately buying a ticket for a seat in a metal tube to hurtle through the air on the way from point A to B. They don't distract themselves with trying to emulate all the complexity of a lot of special cases and different classes of passengers. That said, adding 3-4 rows of premium seating isn't too bad, but keep the number of options to a minimum. Things like charging extra for a reasonable amount of baggage for a week is infurating to customers. Southwest has focused on their customers' wishes: An average seat on a well-maintained plane with better than average pilots, better than average safety, and cheaper tickets than most other carriers. If Southwest became like TWA was, I'll never fly with them again. I'm talking about high ticket prices, and assuring passengers that TWA's seats & metal tubes are somehow better than everyone else's, while having the worst on-time of any carrier I've ever flown. That's ultimately a recipe for bankruptcy, which is the Darwin Award of the airline industry.
As a Texan, Southwest has always been a hero in my eyes. Your video is the best summation that I’ve seen that explains the problem. Hopefully a few “tweaks” in the short run will hold off the wolves until the Max 7 comes on line.
SWA the "good" Texas airline vs American who are probably the worst legacy carrier in a first world country. Or should we call American by their correct name, America West haha, though to be fair AWA was actually a decent airline before they started playing corporate identity theft with USAir and AA.
As a person that has flown millions of miles and works with and for airports all over the world,I am over the purported perks offered by the legacy airlines like AA. I want flexibility in changing flights, easy refunds when I need to change travel, and for the airline to get me there about on time. Free Wi-Fi is also a huge perk to remain connected while traveling for work. I will fly SWA over any other airline when traveling domestically in the US. I am concerned that they will be forced to become like the legacy airlines and destroy the main reasons that I prefer them. Want to change flights on SWA? No problem. Do it on the app. Here is your new boarding pass. Want to standby on AA? Cannot do it on the app. Have to log into the website, put yourself on standby and hope they will deign to let you have a seat. Maybe they will let you know 10 minutes before boarding.
Southwest has been the most consistently profitable airline in the country. This guy is going to change them into American, Delta, or United and then wonder why their profits mimic those airlines as not being consistent and require bankruptcy protection every 15-20 years.
Thank you SO MUCH for all your wonderful content!! You have become a VERY trusted spokesperson for the industry and one that I personally appreciate very much! I was very much a Southwest loyal customer for years but now I haven't flown with them in years. I bailed on them after I was forced into a middle seat and had a bad arrival into Denver where I nearly got my guts bounced out! Also, their over crowded planes and just the hassle of their boarding process was just too stressful. With that said, I do like the assigned seat program and the extra leg room option they are implementing. I will have to see how their prices compare after these changes take place to tell you if I will return as a customer of theirs or not.
I have been a longtime loyal rider of Southwest. I was so sad when they announced they were changing over to the same model as the other airlines. Most all SW flights are 100% booked. Most of us like the open seating by category, plus how easy they make it for pricing by not charging all the extra fees. Baggage is no cost and ease of making changes to the reservations If they change to be like the other airlines, there will no longer be an incentive to be loyal to them. They are a little higher in pricing generally - but think those of us that like the current system do so because it is so convenient for us. IMHO - bad move by SW to become just another carrier.
I mean you've got to admit they've got some balls on them I own 10% of the company so I should get to make 90% of the decisions and I'm going to get rid of the top two people and then 10 out of 15 of the other people
Most investors are passive and don't go to meetings or vote, usually just a few major mutual funds and other holders of 5-20% that actually show up and know the details resonably well.
Sometimes these investment companies can actually make things better for the long term for the business. But sometimes they destroy the core values of the business and it's never the same, and can even fail. It will be interesting to see what happens in this case.
I’m sorry to hear that Southwest is changing to match the other carriers. The biggest reason I fly SW is because they DON’T nickel and dime you to death and that the price you pay for a ticket is the end of it. Basically, if I wanted what other airlines were offering, I wouldn’t fly SW to begin with. Since they will be just like everyone else, I have no incentive to fly with them anymore.
The only “financial activists” SWA majority owners need to listen to are: the passengers. Elliott may have thrown $1.9 billion at the airline, but the passengers throw $7.35 billion at the airline every single year and are by and large happy with them. If Elliott were interested in the passengers - fine. But they’re looking at profit, not passenger satisfaction.
WHY should be Elliot interested in passengers? They are interested in making money. By the way, United is ALSO after money: passenger's satisfacion and love are by-products, they are welcome but do not pay salaries.
@@doujinflip This is, to me, an obvious "Well, FIX it!" situation. Well, we may well have a reformist wind coming at us this November. Let's make the most of it if it does.
@@AlbertoNencioni "WHY should be Elliot interested in passengers?" - Because if the desired changes are implemented and they cause passenger (customer) dissatisfaction, then the passengers will go elsewhere. And without passengers, the airline goes bankrupt. See how simple that was to connect the dots?
Heck! Back in the late 70s I took one look at the tiny fleet and the 3 city "network" and decided I didn't want to work for, nor invest in SWA. I totally misjudged the power of Herb. Today, SWA needs another Herb.
I have loved SWA differences, particularly no assigned seating. In general, I like how easy they have been to deal with. I like the full credit for late cancelations.
Some of you young people have never heard of Frank Lorenzo's or Carl Icahn's antics in the airline business. Re the Max's, even the larger, burns 20% less fuel than the older 737 with CFM's due to the LEAP engine. This throws apples to apples comparisons out the window, as the comparison is apples to oranges. A compensating factor must be in the comparisons between older 737's and the Max's with LEAP engines.
Yes and no. Sure, a part-empty Max-8 burns less a little bit fuel than a full -700 with the same number of passengers, but it is still costing a lot more to run because of the capital cost. The -700 is worth little and long since paid for; a new Max-8 (even if purchased at a big discount off list price) costs many millions, and that capital has to be serviced - whether that is in leasing charges, interest on a loan, or interest forgone if you have paid cash up front, it's still big money.
@@juneabbey9538 There's also labor charges involved. A -800 requires one additional flight attendant vs a -700 so that is one additional crew member that has to be paid. SWA runs 147 seats for a reason, they need a 4th FA at 150 seats. Same reason why JetBlue runs 190 pax on their non-Mint A321s, at 200 pax they need a 5th FA (the general rule is you need 1FA for every 50pax, and aircraft with 19pax or less capacity can fly without a FA).
The names Lorenzo and Icahn still sends shivers up the spine. The airline industry seems to attract the worst of the worst "management".. cue Alan Joyce, Dixon and many others.
A lot of customers, myself included, are very attracted by the lack of assigned seating and free checked bags. Its one of the main reasons I choose southwest because it shows me that they're still a company with real people behind it, not a cold machine designed to extract every dime from their customers.
I wouldn't trust those greedy money sharks any farther than I can throw them. There was another huge missing piece in that Elliott presentation---customer satisfaction & loyalty. And their slick little 51-slide presentation could have been broken down into exactly one statement: Southwest needs to become just as shitty as all the other airlines with their deliberately deceptive pricing & complete lack of concern for their customers. Pfui! My daddy taught me to live by the rule,"If it ain't broke don't be fool enough to fix it. So WHAT if SW revenue has gone down---are they still able to pay their employees & buy fuel & maintain their planes & their CEOs' salaries? This is purely a money grab by a greedy company for their greedy investors for whom there is never enough wealth b/c that's all they value. It's the American way.
The two bags free policy has made Southwest. Dropping that would be one of the stupidest possible moves. So, of course, that's what Elliott wants them to do.
No reason to fly SW if you can go for the same price on another carrier with a more convenient service, schedule, or better fare if you are going to pay for bags and leg room on all of them.
Thank you for the extremely well researched and informative video! Not only did I learn about activist investors but more importantly it seems that SouthWest really needs some kind of changes to stay competitive against the other carriers. Awesome video dear Mentour Now crew!
This is usually asset stripping. They want to cash out part of the company to get a load of the cash for themselves. That trashes the company. Cabela's was the top hunting store, but they sold them off to Bass Pro Shop which is basically the Wollworths/Kmart of outdoor stores. Totally trashed the company. They used to have great quality clothes, and now they sell cheap trash. You assume these people are making an honest attempt to run the company more effectively, rather than a way of making a quick buck.
Exactly!! I live 2 miles from a Cabellas but if I want descent stuff I go to Scheels 35 miles away. Investment companies kill companies fast! Then, just walk away leaving their mess,!
I live in Hawaii. Southwest started flying to Hawaii around 3-4 years ago. The crew flys to Hawaii then flys interisland for a few days before returning to mainland USA. When Hawaiian’s 717’s are completely full interisland the SW 737 Max’s are half empty. Such a large plane for island hops.
They need to move with the times, but Elliott are not in this for the long game. They need to be careful of being pinned down by stock market parasites.
I love the open seating, free checked bags, and friendly customer service, and will likely reduce the percentage of my flights on SWA if they eliminate those features.
Petter: you're not thinking like an American capitalist. What you may be missing is that investors like these do not feel that avoiding bankruptcy or restructuring is a good thing, they think it's a missed opportunity to screw over their employee groups, suppliers, etc., in a favorable venue for cutting costs. I am very confident that they would point directly to what these carriers did in the decade after 9/11 and the money they saved by gutting employee groups. They could be making more money be shafting the customer and charging fees and all sorts of other things. How the airline performs financially or in terms of customer satisfaction doesn't matter AT ALL. Shareholder returns are the only thing that matter. This place is a hellscape, pure and simple.
I’m a loyal SW flier for years. I get good customer service and some perks without having to spend a lot. The free checked bags are a huge deal for me. I recently flew to a conference where I had to bring a suitcase full of books. It wouldn’t have made sense for me to fly them without the free checked bag. I paid a little more for an upgraded boarding position ($20) because I had a 45-minute connection in Atlanta. I appreciated being able to do that so I could be in the third row. It didn’t cost me hundreds more. If it comes down to them being the same price as the other major carriers, I’m not sure I’ll be as loyal.
SWA is my favorite UA airline … they are affordable, they don’t nickel and dime you over additional fees I.e. Baggage fees and are very professional ..
Enjoyed the changes you made on this channel. Much more interesting than previous format of 2 years ago. Keep this platform and continue to improve it. Well done. P.S. 'Alaska Air Group" segment?
Activist investors can be a good thing but that's the rarest possible case. More likely is seeing them gut the organizations they interfere with, firing huge amounts of staff, selling off assets, etc. There's a reason they're called vulture capitalists.
The one thing I think needs to be added to SW's planned changes is investing in a much more robust, modern, and capable IT system for their flight planning.
As a wheelchair user, I LOVE open seating. My wheelchair fits through the door and up to the first row of 737's, so I can hop in and out, rather than waiting for an aisle chair. Easier for everybody!
But others figured out that they could get that first row by simply doing what you do. The airline isn’t allowed to ask what your disability is. And then you pull into the gate, and jetway jesus has miraculously healed half of them.
Southwest is popular with the American flying public because it's CHEAPER to fly on Southwest! Adding premium (more expensive) seating and charging for checked bags etc will, in the long run, COST them customers and further reduce their bottom line....be careful what you wish for!!!
You don't understand things. Activists are those who want to change things in ways they deem better. In business the goal is to earn a profit, preferably to maximise it. Why does a person buy shares in the company? To get a portion of that profit in the form of dividends and/or to see the value of the share increase. Both are these are personal profit, though some investors invest on behalf of others such as a pension fund. They aren't buying shares to frame and hang on the wall. The profit one earns should be at least commensurate to the risk. Anyway, nice to see a viewer from Pyongyang,
@@mytech6779 No. A passive investor hands funds over to a someone else such as professional fund manager to invest on his/her behalf for a fee. An active investor is one who does the research on his/her own. An activist investor is one who holds no managerial or board of director role in the company but wants to make changes to the company to improve the bottom line so that the dividends and the share price increase. There is no twist. Activism consists of efforts to promote, impede, direct, or intervene in social, political, economic, or environmental reform with the desire to make changes in society toward a perceived common good. The activist investor in this context is promoting economic and social change at Southwest. The society is Southwest Airlines and the common good is the betterment of all the investors' investment in the corporation.
@@gagamba9198 That’s the problem though: Elliott is famous for taking very little risk. Its activist investments are typically hedged and derivative based (using borrowed stock) so it has very little downside, but benefits very significantly from anything short term that lifts the price e.g. leverage and and stock buy-backs, which is clearly the intention here, even if not overt.
I really dislike the expression “invested x in the company” to describe a share purchase when what actually happened was buy out of an investment made some time ago by others. It gives the wrong impression that new funds have been invested.
The problem is that these investors are leeches, who's only goal is to make money for themselves, even if it means killing the company and selling off its assets. They have zero interest in improving the company. They're motivated solely by greed.
How do you think that would work? Do you think the share price they bought at was lower than liquidation value? The only way they make money is if business improves, and business won't improve if they turn off all their customers.
Calling it now, SW airlines is going to go through a very rough patch, and may see the end of the airline completely. They are competing with airlines that are doing everything elliot is proposing, but know how to do it better. SW works right now BECAUSE they are different from the other airlines. When SW becomes Delta or United or American, why fly with them? Relying on customer loyalty when you remove everything that made the customers loyal in the first place is moronic and shortsighted. But since none of the presentation was about the longevity of SW as a company, but all about "we'll improve share price!" is very telling. It's not hard to increase share price, you just have to kill the company to do so, and these rich bastards don't care what the ruin, they are after profit pure and simple.
I can't believe I see so many comments like this. People really have no idea how business works. If they kill the company then they kill the stock price and lose money. It seems the management was doing a pretty good job of killing the company on their own before Elliot got involved.
I'm a strong believer and supporter of Southwest. I only fly with them, mainly because of their friendly and unique ways of doing the airline business. Both you Pieter and Elliott are wrong about SWA. There are no planes flying with empty seats, and neither the change of policy to be "like the other guys" is going to be welcome by the customers. Is this Elliott the same one that bought Sears, merged it with Kmart, sold their massive real estate portfolio, then shut them both down?
I don't know, most of the appeal of Southwest was good service, good price, and no extra charges. Now that they need to pivot away from the items that defined Southwest, you already see people start to pivot away from them. I've always ranked Southwest as the "comfort" budget carrier (no frills but comfier than true budget airlines). However, now their prices are on par with mainstream carriers, service has been a nightmare, and they've been rolling out more and more addon features. If I wanted a mainstream airline, I'd just book their ticket as they've been doing it better for longer.
Thanks for another great video! I used to be a huge Southwest fan routinely flying between Baltimore, Washington and Fort Myers. One of my frustrations is every flight to and from Baltimore was packed! I rarely if ever remember an empty seat being available. While you mention their planes are too big…… Not between Baltimore and Fort Myers, Florida. The other reason I gave up on Southwest is no assigned seats. I would gladly pay for a premium seat and an assigned seat. The boarding process is a joke, with passengers requiring a special assistance taking up most of the "a" cat category seats. The other thing I think Southwest is missing is overseas travel. While they do have Caribbean & Mexico Flights, flights to Europe would greatly enhance this airlines profitability. I recognize that the 737 does not have the range even out of Boston to mainland Europe, however, investing in the A321 Neo would be a best bet
If most of this hinges on the Max 7. Then this is going to go nowhere fast. Boeing failing hand over fist is directed tied to Southwest’s biggest issue. Currently the Max7’s have been mothballed for 4 years, with certification being at least 12-18 months away. Knowing Boeing, it could be even longer.
When I first started flying on Southwest I was annoyed by the lack of seat assignment, but once I got used to it, I found it actually works quite well. One of the reasons I loved Southwest, was the lack of baggage fees. As a consumer, I don't like getting dicked around by hidden fees, and like to see the full price up front. Fees make me feel like I'm getting ripped off. Many times I found that once you add the hidden fees on, Southwest became the best value. I have recently tried other budget airlines and felt like I was on an inner city bus. I refuse to ride on any plane that treats us like cattle, or makes the seats uncomfortably small, close, and uncomfortable. Flying on a plane shouldn't be like a pain tolerance marathon.
Have you encountered Frontier cabin crew? EVERY TIME, they're sitting in the back LOUDLY talking crap about people who aren't on that flight. Can't get any sleep because the flight attendants are all yelling and screaming laughing and complaining. AND carry on, $90 each way. Personal item, $40 each way. Choose a seat? $45 each way. Want to speak with an agent? another $60. Don't think about checking a bag. They're so disgusting.
South West Airlines made a profit for 47 years! Wasn't it Warren Buffett who said "The only way to make money with an airline is to start with a lot of money." Also, saying that Elliot Investment was involved with Barnes and Noble and Waterstones isn't the flex they think it is as both companies have disappeared.
Why is no one here remarking about Southwest's "Love you all the way," service and good ol' Texas hospitality? Love-you-all-the-way stimulated a smile in Texans because Dallas Love Field was/is the center of Southwest's operations, and the Wright Amendment made it all possible. Herb Kelleher was a remarkable man in many ways.
My sister worked for SW and she ended up quitting because of their over booking policy. This ensured each airplane is 100% full, but caused passengers to be angry at boarding. No problem just put boarding agent's front and center to take the heat. Save money by scaling down the amount of flights going to the same destination per day but stockholders won't go for this. Mo money.
It sounds like every company they've gotten involved with has done WORSE for their involvement with this Investment Group.. thankfully I have never been and don't plan to be involved with Southwest Airlines
Having seen a lot of private equity plays, the goal is short term gain from leverage (debt) and asset disposal, leaving a business solely reliant on a stable cashflow. But the cost-cutting required to achieve that strong cashflow and the lack of assets to fall back on in the hard times means that at the first hiccup the business fails, the activist investors or private equity having long since recouped their capital by way of dividends from the short term profits. Sure, not all of them play out like this, but many do.
It sounds like the usual: follow the money. The investors get rich and the customers get screwed. Please tell me I'm wrong; that this will be an improvement for the flying public!
Southwest has been my favorite domestic airline. I was even caught in the travel SNAFU. What makes Southwest so good, for me, is, they treat me like a person, like I matter. Even with the travel SNAFU. When Mr. Kelleher died I was concerned Southwest's business model could be at risk. And, I heard about this "activist investor" this morning. Time will tell, and I fear Smelliot could spell the destruction of a great airline in favor of squeezing profit out of every kilogram.
"Kelleher here; OPEN the door!" "Sorry, Herb, we're boarded. You can catch the next one." Southwest Airlines stayed on time (unless providentially detained.)
As a former and long time employee. This is much needed. Upper management had been disconnected for the past 15 years. We all have seen it and expressed it to deaf ears.
So they ruined Barnes and noble, they fucked up Cabela’s, and now they’re going to screw SWA. And they’re starting by making it more like every other airline
As a heretofore exclusive passenger on Southwest, I sm not happy with this... at ALL. Southwest us now switching to assigned seating. I guess I'm either going to fly Americsn Airlines or Spirit. This guy, Singer, seems to be behind every dissatisfaction I've had with any company as of late.
There's a chart in one of Jim Cramer's old books on investing that explains the business cycle and when to invest in various industries. The chart has a footnote that says something like "at no point in the cycle should you ever invest in an airline." I always followed that advice even if Cramer doesn't anymore.
I’m glad you’re doing a video on this. As a long time SWA frequent flyer I am very sad but I have already accepted that the Southwest we knew and loved is likely to be a thing of the past. (If they keep sabotaging all the good things about Southwest, particularly two bags free, I will not be the only former customer who will take other carriers just to say F U to Elliott. Just saying.)
The max-7 max-8 RASM issue could be mitigated somewhat with a change to a larger seat pitch. The extra legroom could be advertised to attract more customers, and the lower seat count will save some weight. Anyway, this sounds like a fancy pump and dump scheme. Copying what other airlines do just hurts SW in the long term because commodities(like seats on domestic flights) are already difficult to sell based on anything other than price on the assigned seating and upgrades simply make SW less distinct.
Premium seats on planes larger then their routes need makes sense to me, but all the other changes erase what made Southwest meaningfully different to other airlines while also forcing ticket prices up across the board. We go to Southwest for reasonable prices and a relaxed experience. Also, anyone who forces a radical change in management is highly suspect in both methodology and motivation. Elliot is an investments company, which means the dollar is their only concern. They don't care about anything else and will most likely encourage running the company into the ground for the highest profit possible in a short term period. I've seen it across multiple industries and have worked for companies with this planning in the past. I wouldn't be shocked to see complaints of poor work culture and environment with low morale within their 12 month plan to increase share prices.
Shareholder value used to be a side effect of being a successful business. Now it is considered the primary purpose. That attitude is destroying great companies and creating homogeneity that makes entire markets vulnerable to risk.
They should not make Southwest another AA, United or Delta because it doesn’t work. I love that it offers free 2 checked baggage, no assigned seats and no classicism! It boards faster because there’s no first nor business class to board. It’s more efficient. I just wanna go to my destination without the fuss. Just make your planes safer!
Go to saily.com/mentournow and use the code mentournow to get an exclusive 15% off your first purchase.
Please now that you are on break, we need more videos on the MENTOUR PILOT channel, at least two videos every week.
#WENEEDMORECONTENTS
It's actually infuriating how when the topic goes to this subject, everyone is suddenly an expert on business, economics, and stocks. Just like they were experts on virology, Ukraine, and everything else depending on the season. I know enough about this subject to say most of the comments are nonsense drivel.
Please focus on plural vs. singular in your speech. An individual "does", many people "do", även om på svenska alla bara gör. Your English is otherwise remarkably good, but this is the one thing I catch now and then.
The problem with this activist investors is that they only aim for fast profits and stock increase. They dont care what happens after they sell
Thats what all wall street does...
Similar to a private equity takeover, which happened to the company I work for. It went from being repeatedly voted one of the best companies in the U.S. to work for to being unable to hold on to its experienced workforce and barely fending off bankruptcy.
@@mychannels2024 agree but probably not to that degree
People keep saying that, but it is not true. The market is forward looking, management might not be but the market is always forward looking. There have been some great meta analysis on this lmk if you want.
@@benchoflemons398 we are not talking about the market in this case.
Carl Icahn did this to TWA and it never recovered from it. He destroyed the airline
Throw in several major air disasters (including TWA flight 800), and none of that probably helped at the end of the day.
Do you think it could be possible that Icahn might have the bloodstains of 230 people because of what he did to TWA? Would they have been able to start replacing their old 747s if he hadn't been so... Disgustingly greedy and deceptive?
He certainly helped, but the decision to sell to him in the first place was equally bad.
@@OTRTraderTWA Flight 800 occurred 3 years after Icahn was ousted and involved a design flaw of the center wing fuel tank and associated*, not corporate shenanigans. Despite the accident NM it being TWA's fault, it still hurt them.
* An exact reason for the explosion was not determined, but is thought most likely due to electricity conducted into the fuel tank through the fuel quantity measuring system.
@@TheOtherSteel No there was no design flaw in the tank, the flaw was in the fuel tank sensor level. The electrical wiring had deteriated badly, along with cracked insulation and more OLD wiring in the rest of the plane made it possible for a High Voltage short to enter the low voltage wiring and thus into the fuel tank where the now elevated voltage caused sparking in what was an other wise empty tank.
To mitigate this kind of fault in the future the tanks were modified to allow inert gas to be pumped thru them, stopping fuel vaporising from heating (heat fuel it becomes a vapor, and that vapor is HIGHLY explosive), and filled the empty tank with a gas that could no aide in combustion, if a spark happpened now, nothing (in theory) would happen.
To say the tank was fault is bollox, 15+ years of poor maintenance and at least 10 years of failed D-Checks were the ultimate caused, had the bad wiring been identified it would have been fixed sooner.
This hits me hard because I’ve been a loyal SWA frequent flier for decades (and stockholder). For a very simple reason. Southwest had (by a country mile) the best people working for them. They also looked at how we fly and all the things that were annoying and inefficient (like assigned seating) and scrapped it so they could offer cheap fares. A plane ticket to Las Vegas for $69 was unheard of until they came along! And for that kind of money, who gives a darn if you sit in the front or the back of the plane? They simply “got it”
These guys at Elliot definitely don’t get it and like you said, they are nothing more than a big shot Wall Street “pump and dump” outfit and they will leave LUV in ruins.
The simple truth is, the real bad guy is Boeing. One big part of SWA keys to success were they put all their eggs in the Boeing 737 basket. This saved them money in pilot/crew/maintenance training, certification and equipment compared to other airlines that had to juggle multiple plane types and makes. Boeing’s greed and sloppy MAX design program has sunk both companies. Elliot is just finding tricky (sneaky) ways to profit from all this.
At WORST... welcome to a moral lesson in what the love of money does to a people, if this is all that Elliot really cares about. At some point the pendulum will swing back to consideration of "human capital."
However I would wish that Elliot would care about larger things. How do we keep SWA from sinking, no matter what the reason? And there's plenty that would be possible to that end. After all, it was SWA itself that decided that Airbus was a no-go, rather than being liberal enough to dual-train pilots and such. (And to be fair, SWA didn't know what had been lurking with Boeing.) All we lack is the willingness. Anything more would require the ability to reach over into Boeing itself and leverage reforms. But even Boeing seeing its best customers start to hedge their bets might hammer some sanity into them.
Don't blame the mechanisms. Blame the players and their parochial games.
I think you are missing a point that Petter mentioned - choice. Many people (like me) don't want to slum it - I want and can afford a bit of comfort. I'm in Europe, so it's not exactly the same, but don't use LCC for that reason, only carriers than offer a premium experience of some sort.
I wish that Southwest hadn’t taken over AirTran because I loved their 717s and their routes, which both soon disappeared after the takeover. I haven’t set foot on a 717 since the merger. I think that Delta bought them and still fly some, but not anywhere I go on Delta. I’m sure that A220 jets will soon replace them, if Airbus can make them quickly enough.
I’m with you. If SWA wasn’t that loyal to Boeing, this story wouldn’t exist nor their situation right now.
I've said it many times but apparently nobody is listening at SWA - The backlog of 737s and Airbus models is immense. Their best bet is to make a deal with Embraer for the 195 series and make due. At half the price of a Max 8, it's also a smart move as their older planes need replacing soon - before the 737 Maxs finally start arriving.
So yet another company is starting to focus on shareholder value primarily. That's very bad news for employees and customers. And what such a culture can lead to, can be seen at Boeing.
Petter knows, too, because he has to fly the outcome.
@@SeekingTheLoveThatGodMeans7648 Not anymore, he's doing UA-cam full time now.
Well in the case of SWA, without changes they were going to be bankrupt within a few years. They were complacent too long and their competitors took a ton of their market share.
Regardless of recent religiously-held political beliefs, the shareholders own the company. SWA has suffered greatly under their current leadership. Herb Kelleher would be ashamed.
Non-assigned seating, no checked bag fees, and ignoring the "rest of the industry" is exactly WHY I CHOOSE Southwest. They are welcome to change, and I am welcome to fly with someone else.
People will pay more for perks, no doubt about it. There is also room for much nuance in all of these areas.
Non-assigned seating causes a rush to be first on the plane. it's better to have assigned seats selectable for free upon online check-in.
@@DarioCastellarinPeople rush onto the planes anyway, to try and get room for their carry-ons, because the other airlines have baggage fees. Before baggage fees, I never had as many issues with a carry-on. And carry-ons suck for boarding and deplaning.
@@DarioCastellarin this is why there are boarding groups & numbers.
Southwest isn’t the value it used to be. Not charging for bags or premium seating means they have to go up on their ticket prices to make up for the revenue. Where I live it’s sometimes the same price to fly on one of the legacy carriers.
We used to call these guys Corporate Raiders, which is more appropriate than "Activist Investor", which is utter BS.
They’re always tough and dramatic sounding titles. Goes along with ‘bull market’ and ‘bear market’. Projection much.
Corporate raiders seek full control. Activist investors buy a tiny number of shares.
He's from Europe, their used to taking it up the backside
@@kavinskysmith4094in Europe we have free education and healthcare. Not multiple mass shootings daily.
And no, you can't come here.
"Activism" usually refers to the environmental good guys, it was shocking hearing it used with a negative connotation here. Is this actually normal financial terminology?
Trust me: Airlines are NOT easy to manage, and the quickest way to destroy one is through excessive cost cutting-
Not just airlines!!
It always amused me that people invest their money a stock because they know they're not competent enough to actually start and run a company in the stock's industry. But the moment the stock value dips, they suddenly decide that they know better how to run a company in that industry.
@@solandri69 It's not always that simple, or even oversimplified. The investment may be the only practical way to get a foot into the arena. And it may not be even the value dip as a financial reason, but as a sign of trouble that the investor is concerned about and wants to see reform come to. (I should not say that this is the case in THIS particular situation.)
It really depends on the angle.
@@sailorman8590 Logistic shipping compannies road/rail/sea/air, transport sector are cyclic, geopolitics als affect them alot.
Just look at what happend with the transport costs of a 40 feet shipping container when the containership Ever Given blocked the Suez canal and the pirate attacks in the waters for the coast of Somalia.
At first containerships were mothballed due to low prices and a short while later shipping costs went truh the roof.
Gordon Bethune, former CEO of Continental Airlines used a pizza analogy. He said you can cut some things here and there and cut costs, but if you cut too much, you haven't got a pizza anymore.
Perhaps Elliott should consider "fixing" Boeing...
Yes. Get them to stop wasting time and energy on D.E.I., sack "diversity managers" etc. and refocus on excellence in engineering and safety.
@@philiphumphrey1548 DEI had nothing to do with Boeing’s weakness. Jack Welch aclolytes did. DEI has nothing to do with having moved away from engineering, if anything DEI candidates are more focused on things other than stock value. Cost cutting and socialization of risk while privatizing profit is a very white male particularly English male thing to do which is to say what went wrong at Boeing is the opposite of DEI.
@@jimallen8186 "socialization of risk while privatizing profit" happens to be the definition of the Equity in DEI
@@jimallen8186lmao socializing isn't a white male thing. Most proponents of socialism are Jewish or some other non-white.
DEI hires are concerned with maximum pay check for minimal work and minimal qualifications. They skate by and fail upwards constantly.
@@philiphumphrey1548 DEI has nothing to do with that, stop spreading such Fox News myths that are usually regurgitated by Elon's twitter account. Boeing was gutted out because it became totally focused on Wall Street satisfaction, At all costs they had to jack up the share price. Boeing's downfall was 100% caused by letting the management of McDonnel Douglas become the management of Boeing during the merger. MD management was purely share price focused and Boeing was engineering focused, Because they knew a well engineered product made money, just not as much as a purely cost focused operation.
This is the sheer irony of an "activist" investor coming from outside and pretending that they can fix a company. I have seen this countless times in my time in tech sector. It never worked out well because all the "activist" is after is ROI over 5 years.
Fewer years if they can manage the pump and dump well enough.
@@mytech6779 Well, we're going to ride this roller coaster till somebody sees fit to change the rules.
well, they could replace and upgrade the computer systems
Over 5 years sounds generous are you sure its not 5 months?
@@robincray116 At least a year so they can claim the long term capital gains tax rate.
It troubles me that Southwest will stop being Southwest and they'll turn into another Spirit or Frontier.
I'd rather fly standby on Southwest than first class on Spirit. NEVER. FLY. ON. SPIRIT. AIRLINES
@@marckyle5895 Awww come on bro... You talking a bunch of bananas.🍌
@@OTRTrader maybe they're to pacify the passengers on the average Spirit Airlines flight...
They'll be a clone of Delta and United... anyone wanting that "treatment" already flies with those airlines. They need to leave Southwest alone because they are by far the best EXACTLY AS THEY ARE! "If it's not broken don't fix it!" is an adage for a reason. It is the economy that is broken--not Southwest Airlines.
@@PureMagma except they suck now. Used to be good.
The problem is that most of those activist investors are only interested in short-term performance. Meaning they don't care what happens after they've sold their shares. So sure Southwest might improve its stock evaluation but what happens after that? Removing seats from a plane doesn't magically make it smaller and more fuel efficient. Nor does it reduce maintenance overhead. Not to mention charging more for "premium" seats just moves them closer to the already pretty close competition. Innovation doesn't mean just barely doing everything everyone else does 😶
That’s fair remarks
This is my thought too. They're okay with anti-consumer practices. Because all they need to do is make the stock price artificially go up sell off their stocks and then if Southwest or any other company that they do this to crashes and burns afterwards even to the extent of going bankrupt from angering their customer base they don't care because they already made their money.
Considering that our transportation system is so privatized. And this kind of anti-consumer behavior destroys transportation companies. I feel that the government has a right to step in and better regulate how this is working on the economic side.
@johnmckeon4498 i do not understand this argument. Because X sector is private and anticonsumer, the government should step in.
Do you mean government should take over, directly or do you mean regulation?
Would you make the same argument with other economic sectors, say tech or agriculture?
I think I've followed the premise but not the conclusion. Could you please elaborate.
@@pyrpoi
Do you mean government should take over, directly or do you mean regulation? => Both are fine, and both have their pros and cons. Case by case basis
Would you make the same argument with other economic sectors, say tech or agriculture? => Yes, any sector of the economy that's so highly privatized and blatantly anticonsumer and antiworker, to the point entire companies and all their employees (plus consumers of that company) get screwed over because of a few rich guys that want to be even richer should be more regulated and/or directly intervened.
Hope that answers your questions!
Thank you so much for this “expose” of Elliot! As a frequent customer of SW Air, I have noticed slight changes and wondered WHY? The insidious chicanery of some of these investors affects the unsuspecting clients/passengers. You are a ray of sunlight! Thx!😊
Reminds me a lot of the original Wall Street movie, where Gordon Gekko takes over a domestic airline
These people are leeches, if you ask me.
Your comment is extremely anti-semitic .
Read your Bible, who are the G-d's chosen people? Spoiler Alert: NOT YOU! They are CHOSEN BY G-D TO RULE THE EARTH! .. So stop being anti-semitic, learn your place and mind your own business. Study (in schools) or work, watch sports, buy, take loans, pay taxes, vote Left or Right and MIND YOUR OWN BUSINESS!
Anti-semitic comment.. you belong to prison
Well the old management managed to tank the stock before the outside investors got involved. If they don't want outside investors to meddle then they should mange the company competently.
I hate the whole activist movement. Just because a single individual or entity has enough money to buy a chunk of a bus, doesn’t make them experts in running a company. A hedge fund bought the pharma company I retired from and they recently cut many long time employees. The company was already very profitable.
They wouldn't be running the company. Only nudge it in another direction. All they have to do is to persuade the other shareholders. As in any election.
Ryan Cohen has entered the chat
won’t be profitable for long; will be split into entities so as to more easily shell costs upon one entity that can go bankrupt while siphoning value through another entity. All part of the privatize gains socialize costs movement.
well, if companies want to be insulated from stuff like this, then they should not allow themselves to be publicly traded otherwise it’s wide-open hunting season because that’s the way the system works.
Venture capital destroys everything it touches. Destruction is literally the business model
If they are trying to turn Southwest into the other airlines, that is an absolute tragedy.
Activist investors. What pieces of trash.
What? They’re just like any other airline except their on time performance is fifth best behind the big 3 and Alaska. Not something to brag about for a company that only knows how to fly one type of plane.
@@JDashRider NPC
@@JDashRider You're not wrong, their operation is horrible but people are idiots.
Assigned seating sounds like a basic "feature" to me. I didn't even know that airlines existed where you just seat wherever. I can imagine people pushing and shoving to get some seat, arguments breaking out.
Discount airlines are losing money with their business model, so how are investors evil for changing to a business model that is succeeding?
I've been a longtime Southwest customer but the assigned seating thing is a dealbreaker. I can't count the number of times other airlines have reassigned my seat to a middle seat.
I LOVE Southwest as it is. They’re the only airline I fly. The no fees for checked bags is especially appealing.
The lack of assigned seats, lack of classism with their seating, and free checked bags is 90% of the reason I fly Southwest. I like that their planes board faster because they don't load the plane inefficiently. The lack of business class seats means everyone is treated the same. These parasites, if they succeed, are going to ruin everything good about SWA.
True words. they only interested in maximising their profit and the long term health of the airline.
"Parasites" is rather rude. They are doing a job.
@@blablablablablablablablablbla, tomato tomato.
@@seriouscat2231 tell me you're dumb without telling me you're dumb
@@blablablablablablablablablbla, you don't need to tell me you're a wannabe corporate raider. Also, I am smart and I don't need you to believe it.
Private Equity? Pretty sure it'll be game over once they're done. They really should call it Private disenfranchisement.
It's left a path of destruction across America
Private equity was a nothing sandwich for Chrysler. Remember Cerberus Capital Management taking them over in 2007?
"Good for stock price" means "bad for customers & employees." Not always, but 99 times out of 100.
Exactly.
100%
In order for stock prices to rise, customers have to buy. Customers aren't going to buy if the experience is bad for them.
SWA has bigger problems than stock price right now, they are losing money. As an already lean operating company offering a mostly few frills product, they can't cut their way out of this, they have to improve the product and win back market share. I'm someone who used to fly SWA myself, but the free for all seating and not being substantially cheaper than competitors had me switch to United for most of my domestic flights and I live in a city that is both a United and SWA hub.
Not really. See the other comment. USUALLY companies are successful because customers prefer their service/product over others.
No assigned seating and no fees for checked bags are features not bugs IMHO. They’re the primary reason we have flown Southwest for many decades. They are some of the things that differentiates them from other airlines.
I watch a UA-cam account called Bright Sun Films that makes videos on big companies that have gone bankrupt in the past. Easily 90% of the stories all have one thing in common before they went bankrupt: some kind of investment management company did to them what Elliott is doing to Southwest...
I’m just waiting to see how long Southwest ends up being another Bright Sun episode. It’s always a hedge fund or an activist investor.
This is like blaming the doctor when a cancer patient dies. Activist investors don't get involved when business is booming.
@@miramichi30 True, but they love to get involved when business is good enough. Then they strip away everything they can and make a quick exit with as much value as they can carry, leaving everything else to die. That's why sane people call them what they are: corporate vultures.
I was a stock trader for a good 10 years. This situation is actually pretty uncommon. Maybe that channel is deliberately searching for those stories since it riles people up.
@@LoremasterYnTarisTell me you know absolutely nothing about stocks without telling me. A profitable company is worth so, so many more times than the value of just liquidating a company.
Southwest has been my favorite for decades. Part of what I like is that they're not like the rest of the airlines. They don't try to bullsh!t their customers. The fact is that an airline passenger is ultimately buying a ticket for a seat in a metal tube to hurtle through the air on the way from point A to B.
They don't distract themselves with trying to emulate all the complexity of a lot of special cases and different classes of passengers.
That said, adding 3-4 rows of premium seating isn't too bad, but keep the number of options to a minimum.
Things like charging extra for a reasonable amount of baggage for a week is infurating to customers.
Southwest has focused on their customers' wishes: An average seat on a well-maintained plane with better than average pilots, better than average safety, and cheaper tickets than most other carriers.
If Southwest became like TWA was, I'll never fly with them again. I'm talking about high ticket prices, and assuring passengers that TWA's seats & metal tubes are somehow better than everyone else's, while having the worst on-time of any carrier I've ever flown.
That's ultimately a recipe for bankruptcy, which is the Darwin Award of the airline industry.
Free drinks and snacks and a ton of free food entertainment options, too.
As a Texan, Southwest has always been a hero in my eyes. Your video is the best summation that I’ve seen that explains the problem. Hopefully a few “tweaks” in the short run will hold off the wolves until the Max 7 comes on line.
SWA the "good" Texas airline vs American who are probably the worst legacy carrier in a first world country. Or should we call American by their correct name, America West haha, though to be fair AWA was actually a decent airline before they started playing corporate identity theft with USAir and AA.
As a person that has flown millions of miles and works with and for airports all over the world,I am over the purported perks offered by the legacy airlines like AA. I want flexibility in changing flights, easy refunds when I need to change travel, and for the airline to get me there about on time. Free Wi-Fi is also a huge perk to remain connected while traveling for work. I will fly SWA over any other airline when traveling domestically in the US. I am concerned that they will be forced to become like the legacy airlines and destroy the main reasons that I prefer them. Want to change flights on SWA? No problem. Do it on the app. Here is your new boarding pass. Want to standby on AA? Cannot do it on the app. Have to log into the website, put yourself on standby and hope they will deign to let you have a seat. Maybe they will let you know 10 minutes before boarding.
The answer is YES ! United Airlines was ruined in the early 90s when Coniston Partners owned only 11% of the stock.
Southwest has been the most consistently profitable airline in the country. This guy is going to change them into American, Delta, or United and then wonder why their profits mimic those airlines as not being consistent and require bankruptcy protection every 15-20 years.
Thank you SO MUCH for all your wonderful content!! You have become a VERY trusted spokesperson for the industry and one that I personally appreciate very much! I was very much a Southwest loyal customer for years but now I haven't flown with them in years. I bailed on them after I was forced into a middle seat and had a bad arrival into Denver where I nearly got my guts bounced out! Also, their over crowded planes and just the hassle of their boarding process was just too stressful. With that said, I do like the assigned seat program and the extra leg room option they are implementing. I will have to see how their prices compare after these changes take place to tell you if I will return as a customer of theirs or not.
I have been a longtime loyal rider of Southwest. I was so sad when they announced they were changing over to the same model as the other airlines. Most all SW flights are 100% booked. Most of us like the open seating by category, plus how easy they make it for pricing by not charging all the extra fees. Baggage is no cost and ease of making changes to the reservations If they change to be like the other airlines, there will no longer be an incentive to be loyal to them. They are a little higher in pricing generally - but think those of us that like the current system do so because it is so convenient for us. IMHO - bad move by SW to become just another carrier.
Not sure exactly what the industry would call replacing senior management and 10 board members. I'd definitely call it a "hostile takeover."
I mean you've got to admit they've got some balls on them I own 10% of the company so I should get to make 90% of the decisions and I'm going to get rid of the top two people and then 10 out of 15 of the other people
If the other 90% of owners aren’t forming a bloc..
Most investors are passive and don't go to meetings or vote, usually just a few major mutual funds and other holders of 5-20% that actually show up and know the details resonably well.
Well if you own 10% of a company, you only have to sell your ideas to 40% of the other shareholders to make changes.
@@mytech6779 Yup with airlines, most of their stockholders are mutual funds, index funds, etc. aka "institutional investors"
Sometimes these investment companies can actually make things better for the long term for the business. But sometimes they destroy the core values of the business and it's never the same, and can even fail.
It will be interesting to see what happens in this case.
It's 2024, we know which way this will go.
I’m sorry to hear that Southwest is changing to match the other carriers. The biggest reason I fly SW is because they DON’T nickel and dime you to death and that the price you pay for a ticket is the end of it. Basically, if I wanted what other airlines were offering, I wouldn’t fly SW to begin with. Since they will be just like everyone else, I have no incentive to fly with them anymore.
The only “financial activists” SWA majority owners need to listen to are: the passengers. Elliott may have thrown $1.9 billion at the airline, but the passengers throw $7.35 billion at the airline every single year and are by and large happy with them. If Elliott were interested in the passengers - fine. But they’re looking at profit, not passenger satisfaction.
WHY should be Elliot interested in passengers? They are interested in making money. By the way, United is ALSO after money: passenger's satisfacion and love are by-products, they are welcome but do not pay salaries.
Unfortunately US laws compel corporations to prioritize their shareholders over their stakeholders.
@@doujinflip This is, to me, an obvious "Well, FIX it!" situation.
Well, we may well have a reformist wind coming at us this November.
Let's make the most of it if it does.
@@AlbertoNencioni "WHY should be Elliot interested in passengers?" - Because if the desired changes are implemented and they cause passenger (customer) dissatisfaction, then the passengers will go elsewhere. And without passengers, the airline goes bankrupt. See how simple that was to connect the dots?
@@AlbertoNencioni Exactly.
"I am not the destroyer of companies, I am the liberator of them". Wall Street, the movie, Gordon Gecko.
Anti-semitic movie and anti-semitic comment
@@operacarmen I'd be curious to your reasoning on calling this an antisemitic comment. Seems pretty relevant to the subject matter to me.
@@operacarmen Bat shit crazy comment. With zero likes.
@@LoremasterYnTaris clearly was criticizing the behavior of semitic inverters .. stop acting clueless
Didn't Carl Ikhan do a number on TWA years ago?
Yes. He destroyed TWA
Assigned seating? Checked bag fees? It WON'T BE SOUTHWEST AIRLINES ANY MORE if they do this!!
AMEN!
Heck! Back in the late 70s I took one look at the tiny fleet and the 3 city "network" and decided I didn't want to work for, nor invest in SWA. I totally misjudged the power of Herb. Today, SWA needs another Herb.
I have loved SWA differences, particularly no assigned seating.
In general, I like how easy they have been to deal with. I like the full credit for late cancelations.
Some of you young people have never heard of Frank Lorenzo's or Carl Icahn's antics in the airline business. Re the Max's, even the larger, burns 20% less fuel than the older 737 with CFM's due to the LEAP engine. This throws apples to apples comparisons out the window, as the comparison is apples to oranges. A compensating factor must be in the comparisons between older 737's and the Max's with LEAP engines.
Jack Welch
Yes and no. Sure, a part-empty Max-8 burns less a little bit fuel than a full -700 with the same number of passengers, but it is still costing a lot more to run because of the capital cost. The -700 is worth little and long since paid for; a new Max-8 (even if purchased at a big discount off list price) costs many millions, and that capital has to be serviced - whether that is in leasing charges, interest on a loan, or interest forgone if you have paid cash up front, it's still big money.
@@juneabbey9538 There's also labor charges involved. A -800 requires one additional flight attendant vs a -700 so that is one additional crew member that has to be paid. SWA runs 147 seats for a reason, they need a 4th FA at 150 seats. Same reason why JetBlue runs 190 pax on their non-Mint A321s, at 200 pax they need a 5th FA (the general rule is you need 1FA for every 50pax, and aircraft with 19pax or less capacity can fly without a FA).
The names Lorenzo and Icahn still sends shivers up the spine. The airline industry seems to attract the worst of the worst "management".. cue Alan Joyce, Dixon and many others.
A lot of customers, myself included, are very attracted by the lack of assigned seating and free checked bags. Its one of the main reasons I choose southwest because it shows me that they're still a company with real people behind it, not a cold machine designed to extract every dime from their customers.
I wouldn't trust those greedy money sharks any farther than I can throw them. There was another huge missing piece in that Elliott presentation---customer satisfaction & loyalty. And their slick little 51-slide presentation could have been broken down into exactly one statement: Southwest needs to become just as shitty as all the other airlines with their deliberately deceptive pricing & complete lack of concern for their customers. Pfui! My daddy taught me to live by the rule,"If it ain't broke don't be fool enough to fix it. So WHAT if SW revenue has gone down---are they still able to pay their employees & buy fuel & maintain their planes & their CEOs' salaries? This is purely a money grab by a greedy company for their greedy investors for whom there is never enough wealth b/c that's all they value. It's the American way.
The two bags free policy has made Southwest. Dropping that would be one of the stupidest possible moves. So, of course, that's what Elliott wants them to do.
No reason to fly SW if you can go for the same price on another carrier with a more convenient service, schedule, or better fare if you are going to pay for bags and leg room on all of them.
Thank you for the extremely well researched and informative video! Not only did I learn about activist investors but more importantly it seems that SouthWest really needs some kind of changes to stay competitive against the other carriers.
Awesome video dear Mentour Now crew!
Glad it was helpful!
This is usually asset stripping. They want to cash out part of the company to get a load of the cash for themselves. That trashes the company. Cabela's was the top hunting store, but they sold them off to Bass Pro Shop which is basically the Wollworths/Kmart of outdoor stores. Totally trashed the company. They used to have great quality clothes, and now they sell cheap trash. You assume these people are making an honest attempt to run the company more effectively, rather than a way of making a quick buck.
Exactly!! I live 2 miles from a Cabellas but if I want descent stuff I go to Scheels 35 miles away. Investment companies kill companies fast! Then, just walk away leaving their mess,!
I live in Hawaii. Southwest started flying to Hawaii around 3-4 years ago. The crew flys to Hawaii then flys interisland for a few days before returning to mainland USA. When Hawaiian’s 717’s are completely full interisland the SW 737 Max’s are half empty. Such a large plane for island hops.
They still use 717's?
@@Brillig2Yes
They need to move with the times, but Elliott are not in this for the long game.
They need to be careful of being pinned down by stock market parasites.
I love the open seating, free checked bags, and friendly customer service, and will likely reduce the percentage of my flights on SWA if they eliminate those features.
Petter: you're not thinking like an American capitalist. What you may be missing is that investors like these do not feel that avoiding bankruptcy or restructuring is a good thing, they think it's a missed opportunity to screw over their employee groups, suppliers, etc., in a favorable venue for cutting costs. I am very confident that they would point directly to what these carriers did in the decade after 9/11 and the money they saved by gutting employee groups. They could be making more money be shafting the customer and charging fees and all sorts of other things. How the airline performs financially or in terms of customer satisfaction doesn't matter AT ALL. Shareholder returns are the only thing that matter.
This place is a hellscape, pure and simple.
I’m a loyal SW flier for years. I get good customer service and some perks without having to spend a lot. The free checked bags are a huge deal for me. I recently flew to a conference where I had to bring a suitcase full of books. It wouldn’t have made sense for me to fly them without the free checked bag. I paid a little more for an upgraded boarding position ($20) because I had a 45-minute connection in Atlanta. I appreciated being able to do that so I could be in the third row. It didn’t cost me hundreds more. If it comes down to them being the same price as the other major carriers, I’m not sure I’ll be as loyal.
SWA is my favorite UA airline … they are affordable, they don’t nickel and dime you over additional fees I.e. Baggage fees and are very professional ..
Enjoyed the changes you made on this channel. Much more interesting than previous format of 2 years ago. Keep this platform and continue to improve it. Well done. P.S. 'Alaska Air Group" segment?
Activist investors can be a good thing but that's the rarest possible case. More likely is seeing them gut the organizations they interfere with, firing huge amounts of staff, selling off assets, etc. There's a reason they're called vulture capitalists.
The one thing I think needs to be added to SW's planned changes is investing in a much more robust, modern, and capable IT system for their flight planning.
Maybe Elliott is saying they should have gone bankrupt for increased profitability?
Buy in, scare existing and potential shareholders. Buy more shares
Exactly, there are many in business who see bankruptcy write-offs and government bailouts as legitamate revenue streams.
As a wheelchair user, I LOVE open seating. My wheelchair fits through the door and up to the first row of 737's, so I can hop in and out, rather than waiting for an aisle chair. Easier for everybody!
But others figured out that they could get that first row by simply doing what you do. The airline isn’t allowed to ask what your disability is. And then you pull into the gate, and jetway jesus has miraculously healed half of them.
Southwest is popular with the American flying public because it's CHEAPER to fly on Southwest! Adding premium (more expensive) seating and charging for checked bags etc will, in the long run, COST them customers and further reduce their bottom line....be careful what you wish for!!!
Shareholder extortion, I’d call it.
The owner of the failing Steak and Shake chain has bought a huge stake in Cracker Barrel, trying to **F** it up too.
Did they F it up or is it piracy meaning siphon away the value and leave other “stakeholders” holding the bag?
@@jimallen8186 Used to be a good place to eat, good service etc, Not now.
Ever heard of punctuation and actually spelling out words?
"Activist" investors is a weird term. They are mostly just doing it for personal profit. Hardly activism.
Active investors rather than passive investors is accurate. "Activist" seems to be a rather poor twist of language.
You don't understand things. Activists are those who want to change things in ways they deem better. In business the goal is to earn a profit, preferably to maximise it. Why does a person buy shares in the company? To get a portion of that profit in the form of dividends and/or to see the value of the share increase. Both are these are personal profit, though some investors invest on behalf of others such as a pension fund. They aren't buying shares to frame and hang on the wall. The profit one earns should be at least commensurate to the risk.
Anyway, nice to see a viewer from Pyongyang,
@@mytech6779 No. A passive investor hands funds over to a someone else such as professional fund manager to invest on his/her behalf for a fee. An active investor is one who does the research on his/her own. An activist investor is one who holds no managerial or board of director role in the company but wants to make changes to the company to improve the bottom line so that the dividends and the share price increase.
There is no twist. Activism consists of efforts to promote, impede, direct, or intervene in social, political, economic, or environmental reform with the desire to make changes in society toward a perceived common good. The activist investor in this context is promoting economic and social change at Southwest. The society is Southwest Airlines and the common good is the betterment of all the investors' investment in the corporation.
@@gagamba9198 That’s the problem though: Elliott is famous for taking very little risk. Its activist investments are typically hedged and derivative based (using borrowed stock) so it has very little downside, but benefits very significantly from anything short term that lifts the price e.g. leverage and and stock buy-backs, which is clearly the intention here, even if not overt.
I really dislike the expression “invested x in the company” to describe a share purchase when what actually happened was buy out of an investment made some time ago by others. It gives the wrong impression that new funds have been invested.
As always, informative, fantastic video! I always look forward every week to what is happening in the airline world.
Thanks a lot!
The problem is that these investors are leeches, who's only goal is to make money for themselves, even if it means killing the company and selling off its assets. They have zero interest in improving the company. They're motivated solely by greed.
How do you think that would work? Do you think the share price they bought at was lower than liquidation value? The only way they make money is if business improves, and business won't improve if they turn off all their customers.
"Greed is good". I don't invest to do good in this world. I invest so I can pad my pension.
You watch too many Hollywood movies.
Nothing good can result from those investors.
Calling it now, SW airlines is going to go through a very rough patch, and may see the end of the airline completely. They are competing with airlines that are doing everything elliot is proposing, but know how to do it better. SW works right now BECAUSE they are different from the other airlines. When SW becomes Delta or United or American, why fly with them?
Relying on customer loyalty when you remove everything that made the customers loyal in the first place is moronic and shortsighted.
But since none of the presentation was about the longevity of SW as a company, but all about "we'll improve share price!" is very telling. It's not hard to increase share price, you just have to kill the company to do so, and these rich bastards don't care what the ruin, they are after profit pure and simple.
I can't believe I see so many comments like this. People really have no idea how business works. If they kill the company then they kill the stock price and lose money. It seems the management was doing a pretty good job of killing the company on their own before Elliot got involved.
They're going to turn into another Frontier rather than AA or UA.
I'm a strong believer and supporter of Southwest. I only fly with them, mainly because of their friendly and unique ways of doing the airline business. Both you Pieter and Elliott are wrong about SWA. There are no planes flying with empty seats, and neither the change of policy to be "like the other guys" is going to be welcome by the customers. Is this Elliott the same one that bought Sears, merged it with Kmart, sold their massive real estate portfolio, then shut them both down?
I think that was Lampert's, ESL Investments. But Elliot Investments *did* ruin Cabela's and Barnes and Noble.
So these investors want to destroy everything that makes Southwest unique.
I was wearing my "This is How I Roll" t-shirt last weekend and someone complimented me on it!!
I don't know, most of the appeal of Southwest was good service, good price, and no extra charges. Now that they need to pivot away from the items that defined Southwest, you already see people start to pivot away from them. I've always ranked Southwest as the "comfort" budget carrier (no frills but comfier than true budget airlines). However, now their prices are on par with mainstream carriers, service has been a nightmare, and they've been rolling out more and more addon features. If I wanted a mainstream airline, I'd just book their ticket as they've been doing it better for longer.
Thanks for another great video! I used to be a huge Southwest fan routinely flying between Baltimore, Washington and Fort Myers. One of my frustrations is every flight to and from Baltimore was packed! I rarely if ever remember an empty seat being available. While you mention their planes are too big…… Not between Baltimore and Fort Myers, Florida. The other reason I gave up on Southwest is no assigned seats. I would gladly pay for a premium seat and an assigned seat. The boarding process is a joke, with passengers requiring a special assistance taking up most of the "a" cat category seats. The other thing I think Southwest is missing is overseas travel. While they do have Caribbean & Mexico Flights, flights to Europe would greatly enhance this airlines profitability. I recognize that the 737 does not have the range even out of Boston to mainland Europe, however, investing in the A321 Neo would be a best bet
You’d gladly pay premium, but some of us just want to go see Gramma the cheapest and best way. Go ahead. You can afford it
If most of this hinges on the Max 7. Then this is going to go nowhere fast. Boeing failing hand over fist is directed tied to Southwest’s biggest issue. Currently the Max7’s have been mothballed for 4 years, with certification being at least 12-18 months away. Knowing Boeing, it could be even longer.
When I first started flying on Southwest I was annoyed by the lack of seat assignment, but once I got used to it, I found it actually works quite well. One of the reasons I loved Southwest, was the lack of baggage fees. As a consumer, I don't like getting dicked around by hidden fees, and like to see the full price up front. Fees make me feel like I'm getting ripped off. Many times I found that once you add the hidden fees on, Southwest became the best value. I have recently tried other budget airlines and felt like I was on an inner city bus. I refuse to ride on any plane that treats us like cattle, or makes the seats uncomfortably small, close, and uncomfortable. Flying on a plane shouldn't be like a pain tolerance marathon.
Have you encountered Frontier cabin crew? EVERY TIME, they're sitting in the back LOUDLY talking crap about people who aren't on that flight. Can't get any sleep because the flight attendants are all yelling and screaming laughing and complaining. AND carry on, $90 each way. Personal item, $40 each way. Choose a seat? $45 each way. Want to speak with an agent? another $60. Don't think about checking a bag. They're so disgusting.
I hate the concept of running a company for profit and share holder value - just where do the customers and employees fit in there?
Customers and employees are short-term profit generators for the shareholders.
I am a very frequently fly Southwest, but what is happening at SWA is going to mean I look to Alaska or United. I love what Southwest currently is.
rip SWA. Nearly all of my favorite vacations as a child were bookended by flights on Southwest. Was nice while it lasted.
South West Airlines made a profit for 47 years! Wasn't it Warren Buffett who said "The only way to make money with an airline is to start with a lot of money."
Also, saying that Elliot Investment was involved with Barnes and Noble and Waterstones isn't the flex they think it is as both companies have disappeared.
Why is no one here remarking about Southwest's "Love you all the way," service and good ol' Texas hospitality?
Love-you-all-the-way stimulated a smile in Texans because Dallas Love Field was/is the center of Southwest's
operations, and the Wright Amendment made it all possible. Herb Kelleher was a remarkable man in many ways.
My sister worked for SW and she ended up quitting because of their over booking policy. This ensured each airplane is 100% full, but caused passengers to be angry at boarding. No problem just put boarding agent's front and center to take the heat. Save money by scaling down the amount of flights going to the same destination per day but stockholders won't go for this. Mo money.
It sounds like every company they've gotten involved with has done WORSE for their involvement with this Investment Group.. thankfully I have never been and don't plan to be involved with Southwest Airlines
Having seen a lot of private equity plays, the goal is short term gain from leverage (debt) and asset disposal, leaving a business solely reliant on a stable cashflow. But the cost-cutting required to achieve that strong cashflow and the lack of assets to fall back on in the hard times means that at the first hiccup the business fails, the activist investors or private equity having long since recouped their capital by way of dividends from the short term profits. Sure, not all of them play out like this, but many do.
Take the activist investor out, I saw what MESS Carl Icon and the rest of those bums did in the 80’s and 90’s
It sounds like the usual: follow the money. The investors get rich and the customers get screwed. Please tell me I'm wrong; that this will be an improvement for the flying public!
Southwest has been my favorite domestic airline. I was even caught in the travel SNAFU. What makes Southwest so good, for me, is, they treat me like a person, like I matter. Even with the travel SNAFU. When Mr. Kelleher died I was concerned Southwest's business model could be at risk. And, I heard about this "activist investor" this morning. Time will tell, and I fear Smelliot could spell the destruction of a great airline in favor of squeezing profit out of every kilogram.
"Kelleher here; OPEN the door!" "Sorry, Herb, we're boarded. You can catch the next one." Southwest Airlines
stayed on time (unless providentially detained.)
If you had followed what happened to Argentina with the story of Elliot, you would have a good idea of the layers of definition of "scum".
As a former and long time employee. This is much needed. Upper management had been disconnected for the past 15 years. We all have seen it and expressed it to deaf ears.
Finally a sane comment here.
That company is embarrassingly overstuffed in management. How many managers do you need, really?
@@Coolsomeone234 we have a saying for that.
"too many chiefs, not enough.. [native Americans]"
So they ruined Barnes and noble, they fucked up Cabela’s, and now they’re going to screw SWA. And they’re starting by making it more like every other airline
You forgot Sears.
As a heretofore exclusive passenger on Southwest, I sm not happy with this... at ALL. Southwest us now switching to assigned seating. I guess I'm either going to fly Americsn Airlines or Spirit.
This guy, Singer, seems to be behind every dissatisfaction I've had with any company as of late.
When I heard they broke down I honestly thought it couldn't get any worse.
There's a chart in one of Jim Cramer's old books on investing that explains the business cycle and when to invest in various industries. The chart has a footnote that says something like "at no point in the cycle should you ever invest in an airline." I always followed that advice even if Cramer doesn't anymore.
I’m glad you’re doing a video on this. As a long time SWA frequent flyer I am very sad but I have already accepted that the Southwest we knew and loved is likely to be a thing of the past.
(If they keep sabotaging all the good things about Southwest, particularly two bags free, I will not be the only former customer who will take other carriers just to say F U to Elliott. Just saying.)
The max-7 max-8 RASM issue could be mitigated somewhat with a change to a larger seat pitch. The extra legroom could be advertised to attract more customers, and the lower seat count will save some weight.
Anyway, this sounds like a fancy pump and dump scheme. Copying what other airlines do just hurts SW in the long term because commodities(like seats on domestic flights) are already difficult to sell based on anything other than price on the assigned seating and upgrades simply make SW less distinct.
Well… on your question about a Activist investor .. MD was bought by Boeing.. the story is well known as Netflix made a document about it. MD won 😂
Yup, MD's shitty management practices took over Boeing.
I definitely think assigned seating and premium seating are good ideas. Also better credit cards.
Premium seats on planes larger then their routes need makes sense to me, but all the other changes erase what made Southwest meaningfully different to other airlines while also forcing ticket prices up across the board. We go to Southwest for reasonable prices and a relaxed experience. Also, anyone who forces a radical change in management is highly suspect in both methodology and motivation. Elliot is an investments company, which means the dollar is their only concern. They don't care about anything else and will most likely encourage running the company into the ground for the highest profit possible in a short term period. I've seen it across multiple industries and have worked for companies with this planning in the past. I wouldn't be shocked to see complaints of poor work culture and environment with low morale within their 12 month plan to increase share prices.
Shareholder value used to be a side effect of being a successful business.
Now it is considered the primary purpose.
That attitude is destroying great companies and creating homogeneity that makes entire markets vulnerable to risk.
If you think the super rich have your best interest at heart name me anytime that ever did anything to help you.
They should not make Southwest another AA, United or Delta because it doesn’t work. I love that it offers free 2 checked baggage, no assigned seats and no classicism! It boards faster because there’s no first nor business class to board. It’s more efficient. I just wanna go to my destination without the fuss. Just make your planes safer!
Don't forget Southwest's part in the 737 Max disasters, that one has been swept under the carpet.
YES. DEI hires have been a thing lately.