Sign Up

Southwest Shares Drop Despite Strong Earnings, Elliott Deal: CEO Warns Of Boeing Delivery Delays If Strike Continues

Southwest Airlines Co. (NYSE:LUV) shares fell by 3% during morning Thursday trading in New York, despite the airline reporting better-than-expected third-quarter earnings and reaching a pivotal agreement with activist investor Elliott Investment Management.

While the earnings beat and settlement should have been positive catalysts, concerns about potential Boeing delivery delays seem to have dampened investor sentiment.

Southwest Earnings Beat Expectations

Southwest posted an adjusted earnings per share (EPS) of $0.15, exceeding analyst estimates, which had predicted a breakeven quarter.

Revenue also outperformed expectations, coming in at $6.87 billion, above the forecasted $6.735 billion, as per Benzinga Pro data.

The airline credited stronger-than-expected travel demand for its earnings beat, and the positive revenue numbers indicate that despite recent challenges, Southwest has maintained solid financial performance. However, market reactions were muted, as investors appeared focused on other concerns.

Elliott Deal: Board Shakeup And Settlement

In addition to its earnings report, Southwest ended a prolonged and bitter boardroom battle with Elliott Investment Management by agreeing to a board restructuring.

As part of the deal, six new directors will join Southwest's board, including five nominees from Elliott.

Notably, Elliott will not achieve majority control of the board, a significant ...