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LUV shares rose on Monday after it was announced over the weekend that activist investor Elliott Investment Management owns a stake worth almost $2 billion and has drawn up restructuring plans for the struggling airline Southwest Airlines.


The move, reported by the Wall Street Journal on Sunday, makes Elliott one of the Southwest Airlines’ (LUV) largest shareholder. The company intends to work with Southwest’s management team, the WSJ said, citing unnamed sources. The company is seeking to replace Southwest CEO Bob Jordan and Chairman Gary Kelly and believes Southwest has gone from being a “best-in-class” airline to one of the biggest laggards, CNBC reported separately on Monday, citing an investor presentation.

Elliott said he conducted an 18-month research period and spoke with numerous former Southwest employees. The investor also spoke to shareholders and surveyed more than 2,000 customers to understand why consumers preferred Southwest, the presentation said.

Southwest Airlines shares plummeted in mid-March after the company announced Boeing (BA) Delivery delays forced the company to reassess “all previous forecasts for the full year 2024, including capital expenditure expectations.”

Meanwhile, on April 25, the airline missed first-quarter estimates and lowered its revenue forecast due to “significant challenges” caused by delays in Boeing’s aircraft deliveries. Southwest forecasts high-single-digit operating revenue growth. It had previously expected double-digit year-over-year operating revenue growth for 2024.

For the full year, FactSet expects earnings to decline 30.6% to $1.09 per share. Analysts forecast revenue to rise 7% to $27.94 billion in 2024.

Southwest Airlines stock

LUV stock rose 7% on Monday following the report. Southwest Airlines stock rallied well above its 50-day moving average on the move. Shares have been in decline for more than 40 months.

Meanwhile, shares of other airlines were little changed on Monday morning.

Delta Airlines (DAL) rose slightly. DAL stock is trading in a buy zone for a cup-with-handle base and is trading near its 50-day line.

UAL shares rose slightly. United Airlines (UAL) is working on a 56.17 buy point for a cup with handle bottom.

American Airlines (AAL) declined slightly as AAL stock continues to trade near 2024 lows.

You can follow Harrison Miller on X/Twitter for more stock market news and updates. @IBD_Harrison


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