The Main Squawk: At Southwest, Elliott gets ready to take out the trash
Elliott is continuing to dig deep in its fight to instill change at Southwest. On Thursday, it announced plans to replace ten of the fifteen directors sitting on the Airline’s Board. The replacements range from former airline CEOs and executives from Air Canada, Ryanair, Virgin America, and WestJet; to the former president of Marriott International, who supposedly can secure better perks for crews on their overnights.
On Wall Street, people call this a proxy fight, and they usually occur when a group of shareholders are unhappy with how a company is being managed. Unfortunately, these fights can get expensive, they’re usually contentious, and they generally play out in public view with significant impact on a company’s stock price and overall direction.
In Elliott’s case, a significant impact on Southwest’s overall direction is exactly its intent. Their goal is to convince the Company’s shareholders that expertise from their cadre of nominees is exactly what it needs to become a stronger, more well-positioned airline for the years ahead.
To date, Elliott has taken a near 10% stake in the LUV-able Dallas-based airline, while the Company’s shares are down over 8% year-to-date.
JetBlue is shedding European growth as it recalibrates its focus on profitability. The tone of its earnings call suggests it just realized there’s untapped growth to pursue in New England markets, prompting Avelo and Breeze to consider buying more gates at Hartford.
Key to getting its balance sheet under control is maintaining fleet commonality. Currently, the Queens-based carrier flies a range of Airbus A320s, Airbus A220s, and Embraer 190s. In an effort to better squeeze profit out of markets that are viable with reduced frequency, it plans to complete its transition from the Embraer 190s to Airbus A220s by the end of 2025.
While the Company said it can handle growth in its core markets with its existing fleet, slowing its European expansion will enable it to more easily realign itself with key domestic markets. Service between Boston and Amsterdam, and service to London-Gatwick were always great ideas, but it seems they’ll become a less significant part of its expansion plans for the next five years.
CEO Joanna Geraghty says slowing the Company’s European growth will help it optimize its operation, and that it is “by no means a retreat.”
Alaska and Hawaiian knocked down another hurdle on their path to a merger. Judge Derrick Watson in the U.S. District Court of Hawaii threw out a consumer lawsuit alleging harm to the traveling public would ensue if the two airlines were combined.
The Judge basically said if Alaska and Hawaiian got hitched, hardly anyone could get hurt.
The merger still faces regulatory scrutiny by the DOJ, but as we learned from Judge William Young who presided over the JetBlue-Spirit anti-trust lawsuit, the odds for Alaska and Hawaiian are good.
Boeing discovered an electrical issue on its 737 MAX, further compounding delivery delays in what has already been a nightmare of a product. The issue was identified at its manufacturing facility in Renton, W.A. and has to do with junction boxes on the aircraft.
Believe it or not, the 737 does have some electrical components on board, so the issue is significant. Engineers are considering mitigating the issue by replacing the affected electrical components with mechanical links just as they had in the 1960s.
The issue has grounded three recently delivered airplanes to-date.
Air Canada is resuming service between Ottawa and London-LHR in 2025.
Alaska flight attendants rejected their latest tentative agreement.
American is bringing back pillows and blankets to its First Class cabin on redeyes. On another note, it is apparently the airline of choice for feet pics.
United has full confidence in Boeing’s new CEO, and all it took was a nice lunch. On the topic of lunch, it is also being sued by one of its pilots over failing to provide reliable Gluten-Free crew meals.
Virgin Australia ordered eight Embraer E190-E2s.
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