Dallas — Southwest Airlines Apple Inc. raised its third-quarter revenue forecast on Thursday, announced that its board of directors had approved $2.5 billion in share buybacks and outlined a series of changes to its business model as it seeks to defend itself against activist firm Elliott Investment Management.
The airline said it expects unit revenue to rise as much as 3% in the third quarter compared to the same period last year, up from a previous forecast of a decline of up to 2%.
The carrier also said it will add Bob Fornaro, a respected industry veteran who previously led Spirit Airlinesto its board of directors. Southwest’s relationship with Fornaro dates back more than a decade. Fornaro was CEO of AirTran, the airline that Southwest merged with in 2011, and was an adviser to Southwest after the merger.
Southwest executives present their vision for the company’s future at the company’s Dallas headquarters Thursday during a presentation marking Investor Day. Chief Executive Bob Jordan and other top leaders at Southwest are under increasing pressure from Elliott, which has called for a change in leadership at the airline.
Southwest executives will be trying to convince investors that it’s on the right track to boost profits and revenue. Over the summer, the company unveiled sweeping changes to its more than half-century-old business model, including assigned seats and extra legroom, that could generate more revenue for the company.
In its presentation Thursday, Southwest stuck to its long-standing policy of allowing customers to check two pieces of luggage for free, saying it “generates market share gains that exceed potential lost revenue from baggage fees.”
The day before, Southwest told employees it would reduce service to Atlanta next year and may lay off more than 300 flight attendants and pilots from the city in an effort to cut costs.
Earlier this month, Southwest CEO and former CEO Gary Kelly said he would step down by the end of next year. Elliott later told the Southwest Machinists’ Union that it still wants a leadership change at the top of the company. The company did not immediately comment on Southwest’s strategy presentation released Thursday.
— CNBC's Rohan Goswami contributed to this report.
