{ "docId": "019dd923-622c-750b-8b9c-8bc9f8f954bc", "docSlug": "0c8bae70d86d", "documentTitle": "Southwest Airlines (LUV)", "authorId": "02_Elliott_Management", "authorName": "Elliott", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2024-06-10 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 30, "pageCount": 51, "prevPage": 29, "nextPage": 31, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 0, "notes": "The slide uses a series of pull-quotes to build a narrative of management failure.", "elementsJson": [ "headline_text", "subtitle_text", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9c-8bc9f8f954bc/30", "deckHref": "/decks/019dd923-622c-750b-8b9c-8bc9f8f954bc", "deckJsonHref": "/decks/019dd923-622c-750b-8b9c-8bc9f8f954bc.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9c-8bc9f8f954bc#slide-30", "components": [ { "bbox": null, "kind": "callout", "text": "Investors and research analysts have been calling for changes for years, but Southwest's management and Board have pressed forward with incrementalism and inaction", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-e6ed-775b-bcb1-55012ac48c75", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.9, "x": 0.05, "y": 0.12 }, "kind": "paragraph", "text": "Investors and research analysts have been calling for changes for years, but Southwest's management and Board have pressed forward with incrementalism and inaction", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ef339474-92ed-4669-979b-f33d23b2cb1a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.9, "x": 0.05, "y": 0.34 }, "kind": "quote", "text": "Everything [they're] doing is incremental. [They] need to make radical changes. Wolfe Research Weekly Webcast, October 2023", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2b19ce6d-9cc5-481b-a526-7d4655732336", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.67 }, "kind": "quote", "text": "Time to pull the RASM lever?... The main – and perhaps only – lever they have now to overcome cost inflation is to boost RASM... Morgan Stanley, January 2024", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "38fa0f04-9677-4c53-8c46-5ec265944c77", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.43 }, "kind": "quote", "text": "...What might you consider strategically or put on the table that hasn't been on the table before? ... If you have lagging margins, it may require a harder look. Evercore Analyst on Q3 2023 Earnings Call, October 2023", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9a480dff-dc63-49c5-9623-e03effcd6e0f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.22 }, "kind": "quote", "text": "Quite frankly, I think [regaining the high ground] is going to require evolution... It's a bit of an identity crisis. J.P. Morgan Webcast, May 2023", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ba228b13-c9bf-46ee-956b-d61afec1bca2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.77 }, "kind": "quote", "text": "We have long made the case that the Company's inability to monetize its cabin and participate in various high-margin revenue streams was a drag on relative margin performance. Deutsche Bank, April 2024", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d917e22b-2c0a-4ceb-b0ad-8f72ad70be82", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.55 }, "kind": "quote", "text": "There is a lot of debate about the airline's lack of a premium product vs. peers and ancillary revenue opportunities beyond boarding... Cowen, January 2024", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ebbfc5a2-1d8a-4af6-8bbf-a35dc3fe4394", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "Quite frankly, I think [regaining the high ground] is going to require evolution. We’ve been concerned about Southwest for some time, that it has mostly, not entirely, but mostly sat out the industry’s evolution... They have a product and price points that skew more toward discount airlines but a cost structure overall that skews a bit more toward the Big 3. It’s a bit of an identity crisis. — J.P. Morgan Webcast, May 2023; Everything [they're] doing is incremental. [They] need to make radical changes. — Wolfe Research Weekly Webcast, October 2023; ...What might you consider strategically or put on the table that hasn't been on the table before? So if we think about things like seat assignments, basic economy, bags fly free, historically, those have been sacrosanct... If you have lagging margins, it may require a harder look. — Evercore Analyst on Q3 2023 Earnings Call, October 2023; There is a lot of debate about the airline's lack of a premium product vs. peers and ancillary revenue opportunities beyond boarding... The drum beat on closing the margin gap with the network airlines will continue to beat louder... — Cowen, January 2024; Time to pull the RASM lever?... The main – and perhaps only – lever they have now to overcome cost inflation is to boost RASM... LUV still remains at a relative disadvantage to all their major competitors in the pursuit of premiumization. — Morgan Stanley, January 2024; We have long made the case that the Company's inability to monetize its cabin and participate in various high-margin revenue streams was a drag on relative margin performance. — Deutsche Bank, April 2024", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-e6ed-775b-bcb1-5b7627bfbe2f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.5, "x": 0.05, "y": 0.96 }, "kind": "source-note", "text": "Source: Equity research and Company transcripts. Note: Emphasis is added to all quotes.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "554aa21d-d6d9-4d73-9f88-fb7bb032c6d2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.9, "x": 0.05, "y": 0.05 }, "kind": "title", "text": "Leadership Has Ignored Calls for Change", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "101f92ba-b345-478a-8207-2c312e51d131", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "authority-citation", "slug": null, "matchId": "3fd08719-325c-451b-b400-82e6771af99c", "evidence": "Use of multiple analyst quotes to validate the activist thesis.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }