Christine Boynton May 16, 2024
Credit: Southwest Airlines
Nodding to past acquisitions, Southwest Airlines says “never say never” to considering another, though the company has no immediate plans to do so.
“We’ve done acquisitions over our history here at Southwest – Morris [and] I participated in AirTran – you never say never to those kinds of things, but we’re focused on, right now, running our business, improving our returns, managing the impact of the Boeing shortages,” CEO Bob Jordan said during a May 15 shareholder meeting. “So, never say never, but no, there’s certainly nothing on the horizon in this moment.”
In mid-March the union representing its pilots announced it would retain several law firms, should the airline attempt to acquire another carrier. In making the announcement, SWAPA said it had no knowledge of an acquisition or merger in its future, describing its move as strategic and aimed at mitigating risk.
Contending with capacity constraints, Southwest is currently in confidential discussions with Boeing about its delivery delays. At the beginning of 2024 the carrier expected to receive 79 of its 85 contractual MAX deliveries this year; it is now planning for 20 737-8 deliveries in 2024. Executives declined to provide details concerning potential compensation.
“There are, of course, impacts to all of this, you’re not receiving aircraft as planned, we’re having to reduce capacity, obviously, there are costs to being overstaffed,” Jordan told shareholders. “We are having discussions with Boeing, and we will talk more about that as we’re able… we’ve been able to work through difficult situations with Boeing in the past, and I’m confident that we’ll be able to work through the current set of issues.”
Southwest is also working to manage accelerated costs it describes as primarily the result of new market-driven labor agreements. Contracts ratified by its pilots in January and by its flight attendants in April are valued at roughly $12 billion and $6.3 billion, respectively.
Its go-forward action plan includes making network adjustments, tuning its new revenue management system, and launching a brand campaign. Additionally, the carrier has in recent months announced intent for future red-eye flights, and detailed technology investments aimed at improving turnaround times at the gate.
As Boeing delivery delays have left it overstaffed in many workgroups, Southwest has implemented voluntary time off without pay programs, and halted critical hiring. The airline expects to end the year with a headcount reduction of roughly 2,000 versus the end of 2023 and told shareholders it intends to end 2025 with a further reduction.
Christine Boynton is a Senior Editor covering air transport in the Americas for Aviation Week Network.