Activist Will Hit Headwinds in Taking On Southwest
Elliott Investment Management is long on criticism but short on ideas on how to improve an airline in an incredibly fickle industry.
The business models of activist Elliott and Southwest aren't compatible.
Photographer: Angus Mordant/Bloomberg
Delta Air Lines Inc. and United Airlines Holdings Inc. have posted solid profits coming out of the pandemic. The rest of the US carriers, including Southwest Airlines Co., have struggled with an uneven recovery highlighted by a spurt of revenge leisure travel after the Covid-19 lockdowns and a belated rebound of business flyers.
Delta and United swooped in to gobble up those leisure travelers with a full array of offerings from basic economy fares to premium travel on their fleets of different sized aircraft and are riding the recovery of international travel. American Airlines Group Inc. has the potential for that same broad offering but shot itself in the foot by bungling its commercial strategy, including trying to force travel agencies to deal directly with American on its new internet platform.
The discount-fare companies are getting squeezed from all the capacity directed toward leisure travelers, which are the bread-and-butter customers for Spirit Airlines Inc. and Frontier Group Holdings. JetBlue is morphing from a discounter to a full-service airline but doesn’t have the size. The airline was dealt two blows when its partnership with American in the Northeast and its attempt to purchase Spirit were shot down in court.