Southwest Airlines is walking away from what made them unique. They’re introducing less legroom in regular seats to make room for additional legroom premium seats to sell. They’ll be selling seat assignments instead of offering open seating, which contributed to fast boarding (and giving up early boarding revenue). They’ve reduced points-earning through Rapid Rewards, and will be expiring customer travel credits. And they’re going to charge for bags, after investing heavily in ‘bags fly free’ as their unique selling proposition.
Southwest Airlines CEO Bob Jordan should resign.
The board has no confidence in him. In recent months, Jordan declared to investors and in messaging to customers that checked bags were here to stay. He explained to investors in September,
Our [bags fly free] policy not only provides customer value and generates enduring loyalty, the policy also generates significant shareholder value, and there is significant customer and financial risk to eliminating or changing the policy.
And here’s what he told customers:
The board clearly overruled him, and he nodded to this in comments announcing the change at the J.P. Morgan investor conference on Tuesday as pointed out by Brian Sumers.
He and his team had a plan to change with the times, while keeping a few things that still would attract customers and differentiate the airline. And now, apparently, the airline’s board has said, ‘nah: we’re going to do it another way.’ And Jordan seems content to be the public face of it all.
It’s all become a bit of a farce. Jordan is a nice guy, but at this point, it’s pretty obvious that he’s not calling the shots.
He’s sacrificed senior leaders to save his own job. CFO Tammy Romo is leaving. Former Chief Commercial Officer, who headed the so-called transformation, Ryan Green is leaving. Jordan has been bending over backwards to save his own job at the cost of his people and the airline’s culture.
He’s sacrificed the culture of the airline, embracing layoffs for the first time in company history and eliminating investment in employee morale-building.
He’s responsible for much of what’s wrong at the airline. The Elliott Management solutions for Southwest are a disaster, but their critique of the airline being insular, bloated and rudderless is not wrong. They were slow to react to changes in customer preferences, to develop airline partnerships, and evolve their product.
While perhaps mostly at the feet of former CEO Gary Kelly, before becoming CEO Jordan served as Chief Commercial Officer, Executive Vice President Strategy and Planning, as well as Technology, plus headed spend management and procurement. His work helped contribute to the airline’s meltdown in December 2022, where he was largely absent fronting the carrier.
In my Southwest Airlines fanfic, instead of taking a golden parachute that ties his ability to speak publicly, he goes down swinging about what’s happened with Elliott Management and in the boardroom with their appointed directors. Realistically, though, the simple act of resigning would quietly communicate just as clearly.
Jordan no longer leads the airline, he carries water for others above him who aren’t giving him the space to make decisions. He likely doesn’t need the job. Why is he sacrificing his integrity to front these changes? It’s time to walk away, and signal that the place he’s worked since 1988 does not exist any longer.
100% Gary—He mislead the company through its own self-sabotage as directed by Elliott Management. A betrayal to loyal passengers, crews, and the ethos of this company. He chose his own short term gains over all else.
and if I read correctly… it’s FLIGHTS from 5/28 onward… so… screw all the folks who have bought their summer travel stuff with them already… but… hey… we let them have Memorial Day! (such love from LUV).
Totally agree as well, eloquently stated.
Herb Kelleher created an amazing airline. My favorite quote from his to this day is ““Power should be reserved for weightlifting and boats, and leadership really involves responsibility.”
Gordon Bethune from Continental Airlines also had a famous quote. “You can make a pizza so cheap, that no one will eat it.”
SWA is in the hands of the stock analysts now who hold power, and will yield responsibility to the market. Hopefully the product stays good enough to use. If not it may open up room for many new startups.
@md: That’s incorrect. Tickets issued 5/28 and on have expiring funds.
I could support any CEO brave enough to reverse some of these changes, particularly funds expiration, which is a customer-hostile policy. Southwest could keep one differentiator with non-expiring funds. It wouldn’t cost the airline much and it would save customers a lot of headache and anger.
Considering the big paycheck and gold plated hesthcare package, it would be foolish for the CEO of Southwest to resign.
Bob Jordan, Andrew W., Chris Johnson, Steve Stone, Doug Currie, Samer Rana, and 90% of Southwest Leadership and headquarters needs to be Roto Rootered. Terrible Leadership, rock bottom.
Will he be gone by Oct 4, Oct 11 or Nov 1? Maybe I will fly Southwest to the Mod Do while he is still CEO.
I’m surprised he hasn’t resigned already, but I guess that is a sign of the times where people remain in place for money (or status) versus the honorable thing.
What I’m interested in is how to trade this. LUV without the love is going to tank – high cost model without the high-cost assets, including gates and corp contracts – but how do you get the timing right to profit?
With this airline killing off its differentiation from the domestic/intra-continental competition, what does it really have left to get people to choose it? It doesn’t take a lot for an airline to JetBlue itself.
A lot of these bloggers slam the new changes but how many of them actually fly Southwest? Some say they rarely fly them. Others say nothing.
I fly Southwest occasionally. The last time was last month. Maybe up to 5% of my flights are on Southwest.
With all due respect Mr, Leff, you’ve been the CEO of how many airlines? You have every right to your opinion of course. I’m simply questioning your qualifications and expertise in the area of airline management.
@DesertGhost – What do you actually disagree here about what I’ve written? Or as usual do you prefer substanceless aspersion?
Then who would be a good fit? Is there an Elliott Mangement that would like to step into the limelight? Maybe he will leave after all changes are done for a large bonus. People will still fly Southwest in secondary cities that have strong followers.
Zing! Go Gary! Go!
@DesertGhost — Not respectful at all. Why are you shilling for a greedy CEO? Carry that water. Lick those boots.
@derek — You think only the bloggers ‘slam’ these changes? My dude, this pleased no one but the hedge fund and the CEO. Even if you fly them once a year, these are objectively bad changes for the passengers.
I will never understand the love for Southwest and the fondness for illusions of its past glory. It is a cattle car carrier and always has been. It has a reputation for (until now) not charging for checked bags, as much as for a less than stellar safety record. There is nothing compelling about flying it.
Never trust a CEO in a cheap, ill-fitting suit…
We knew this stuff would happen……
Unfortunately CEO golden parachutes are now so large that they are well paid in both good times and bad. A “good CEO” is now largely differentiated from the rest by intrinsic motivation and honor rather than pay. Only a rare few CEOs are both truly passionate about the company they lead and improving the world through innovation and better service AND grounded enough in economics to keep the company viable.
Most CEOs are now either:
1) emotionless, cost-cutting bean counters biding their time long enough to retire,
2) inventors that lack financial knowledge (and flame out quickly),
3) power-hungry scoundrels involved in affairs or sexual misconduct, or
4) outright scam artists (e.g. SBF or Elizabeth Holmes).