Southwest Airlines Set for Major Shake-Up | A New CEO With “Hawaiian” Roots?

As rumors swirl rapidly in the airline industry, Southwest Airlines may be gearing up for significant announcements, as early as Friday, that could greatly impact Hawaii flights. Two important developments appear on the horizon at Southwest: the long-anticipated introduction of redeye Hawaii flights (and others) and the potential change in leadership that’s been looming recently. And then much more relating to Hawaii travel.

Andy Watterson and former SWA CEO Gary Kelly.

Potential new CEO: Andrew Watterson, prior Hawaiian Airlines’ executive.

There is growing speculation that Bob Jordan will step down as CEO of Southwest Airlines, with Andrew Watterson, a former Hawaiian Airlines executive, mentioned as possibly poised to take the helm. This isn’t the first time we’ve mentioned Watterson in that regard within our articles; we highlighted his potential rise in the company, including in our October 2022 article referencing the Former Hawaiian VP’s Promotion To #3 at SWA.

Nearly two years ago, we reported that Watterson was promoted from Executive Vice President & Chief Commercial Officer to the #3 position of Chief Operating Officer, and we’ve actually wondered for five years if Watterson wasn’t ultimately poised to be in the lead.

We even jokingly suggested that to Watterson when he was in Honolulu for one of Southwest’s Hawaii roll-out events. At his last promotion, Southwest announced that “In his new role, Watterson will provide Executive Leadership to Flight Operations, Inflight Operations, Crew Scheduling, Cargo & Charters, Customer Support & Services, Ground Operations, Hospitality Operations Support, Labor Relations, Network Operations Control, Regulatory Programs & Compliance, Operations Strategy, Performance & Design, Safety & Security, and Technical Operations. Additionally, he will continue to oversee the airline’s Network Planning Department.”

Watterson, who left Hawaiian and joined Southwest as VP of Network Planning and Performance about a decade ago and has been Southwest’s Senior VP of Network and Revenue Management since 2017, was a very significant hire for Southwest, given his extensive knowledge from his executive tenure at Hawaiian Airlines. The further promotion to COO spoke not only to how valuable Watterson is to Southwest but also to the importance of Hawaii to their business. But there’s more to Andy and Hawaii than that.

Introduction of Hawaii redeye flights

Another significant rumor is that Southwest Airlines may announce their first redeye flights tomorrow by loading them into their reservation system. This move is necessary to maximize resource utilization and compete more effectively in key markets. Hawaii, with its long flight durations and location, is expected to be a crucial part of Southwest’s new redeye schedule.

Two months ago we reported on rumors that Southwest might imminently announce redeye flights. The expectation was that Southwest, the last major airline flying to Hawaii without redeye options, would soon join the ranks of carriers offering overnight flights from Hawaii to the mainland.

According to that article, “Southwest said last month that they ultimately plan to offer a range of red-eye flights, perhaps up to 50 per day system-wide. Hawaii and Las Vegas are the two places that Southwest plans to start the process.”

Industry insiders have mixed feelings about these potential changes.

One analyst noted that Southwest updated necessary systems last weekend, allowing for this change. It is still widely believed that while the introduction will come very quickly, the first redeye flights may still await the end-of-year holidays.

Southwest’s decision to possibly accelerate launching already planned redeye flights may be in response to mounting pressure from Wall Street and activist shareholders. There is also speculation that while Hawaii may be included in the initial rollout, island flights might also await mainland redeyes. We expect a comprehensive redeye schedule, including Hawaii, very soon.

Navigating Southwest challenges in the Pacific.

We continue to approach these significant rumors with a degree of caution. Southwest has long faced delays with implementing plans, often due to challenges with their problematic IT systems. That’s somewhat ironic given that, as investor Elliott points out below, Southwest was the “first major airline to create a website, which by 2000 generated over $1 billion of revenue. Southwest was also the first major airline to introduce e-tickets.” And yet, there has long been a lack of investment in its infrastructure and IT, even according to their pilot union president.

Does Watterson’s background hurt or help Southwest and Hawaii?

Some analysts question Watterson’s Hawaii-centric approach at Southwest. With Andy at the helm in relation to network planning and Hawaii flights, more specifically, we have to wonder if the very strong launch into interisland flights may have led to a big hit in profits.

Southwest has a load factor significantly less than Hawaiian on interisland flights.

There’s certainly no doubt that Southwest helped cut the price of interisland flying significantly for Hawaii visitors and residents, including to this day. Their load factor and average ticket price, howeer, may not be sustainable in an evolving financial environment with investors exerting more scrutiny.

This profitability concern is part of a larger issue highlighted by activist investor Elliott, who’s been in the news headlines for weeks. He is pushing for a leadership change at Southwest. Their campaign, detailed on the website Stronger Southwest, underscores the financial strain of Southwest’s current operations in Hawaii.

Hawaiian’s interisland load factor has remained virtually unchanged over the past five years according to Elliott.

It sits at a healthy 74%. Conversely, Southwest has a “36% lower load factor.”

Regarding ticket costs, since Southwest entered the market, their fares have only risen to an average (as of 2023) of $38. During the same period, Hawaiian Airlines ticket prices dropped significantly, as we are all aware, from an average of $74 to today’s $54. See page 36 of the investor presentation below.

It seems that within financial constraints, Watterson would remain a pro-Hawaii force at Southwest. How that translates into new routes, a reduction of current routes, or other new options, including seat assignments or more, isn’t yet clear. Also once Southwest starts running redeye flights, that might reduce their interisland flights to some degree, as planes arriving in Hawaii late in the day could then return directly to the mainland overnight.

Conclusion about what’s upcoming at Southwest.

The next few days could be pivotal for Southwest Airlines. And clearly there are many changes afoot. Whether these rumored announcements come to fruition immediately or face further delays also remains to be seen. As always, we will keep you updated with the latest developments.


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15 thoughts on “Southwest Airlines Set for Major Shake-Up | A New CEO With “Hawaiian” Roots?”

  1. SWA’s new president will do whatever the new board tells him to do. Forget his previous airline experience. To take cost out they will probably go ala-carte pricing like Frontier and Spirit. They may not choose to stay in the HI market at all. If they stay they will cut prices to the point where HI Air will have to abandon trans-PAC service. It’s always ugly and each city pair has to stand on its own or get cut. I suspect Alaskan is going to stall on the HI merger and wait to see what the new SWA will do. Plus, SWA is 100% Boeing 737 and can’t get new aircraft at the rate originally planned. The new Max models are much cheaper to operate. I suspect their forecast was blown because they aren’t phasing out the older aircraft as planned. They will need to get very high load factors and Keep every aircraft every possible min. Given all that, speculating on how they will behave is futile. And given the behavior of HI and Maui’s politicians, it’s likely they will leave HI.

  2. The most fuel is burned during takeoff and reaching the 30-40 thousand feet mark. Short flights endure more compression cycles to the skin of the aircraft because more flights a day can be made on short one hour flights. Hawaii you should be appreciative and happy that some airline wants to provide you this service. Especially if it is cheap. New pilots probably get these scheduled because they are the most unfavorable (#of flights a day) and the 8 hour flights to the mainland are the cream of the crop. Try flying in a cessna or a 4 seat plane from island to island. Quit b******in like a bunch of coconut heads.

  3. Hopefully SWA pulls out of their unprofitable interisland Hawaiian flying. Seeing route reductions to/from the mainland is a good start. Southworst has got to go.

  4. First major airline to introduce a website and first at e-tickets, this a reply of history with SWA being the “AOL” of the airline industry the “you’ve got mail” of the airline industry….surpassed by everyone else, being first is great until you sit on it for 28 years and every major airline in the world passes you up. They are good at marketing, making their passenger lineup look innovative instead of replacement for their lack of IT capability and billing as a low cost carrier yet being the highest passenger revenue per mile of all US airlines, they are masters of the spin for sure.

  5. i hope sw starts some redeye flights out of hawaii. would be a great customer option. i often fly on both sw and hal.

    personally, i’m glad sw is in hawaii. keeps our cost in check. let’s not forget that before sw was here, hal was charging over $300 per person round-trip for interisland flights. everybody remembers that.

    because of that, i’m glad that gov ige “asked” sw (strongly) to do interisland flying, as opposed to their original plan of “crossings” only.

    sw lower interisland load factors? yes, but how many seats in a 717 vs 737? besides, more space for me as a customer. plus, no added cost of operating a separate fleet of “interisland” fleet. they just operate interisland by moving their aircraft around a couple of times, then back to the mainland. i’m sure that they aren’t making as much as they would like interisland, but then again, neither is hal, right? customers win! the “crossing” load factors are what counts

    1. I agree competition is good if done properly, however SWA is losing money at their prices, they were trying to put HA out of business. They charged me $226 each way from LAS to RNO ($552 RT) for the cheapest fare (wanna get away) which is just slightly farther than Honolulu to Hilo, and the flight wasn’t full, so if they were the only one’s doing interisland they would be WAY more expensive than HA ever was. In fact HA is one of the cheapest revenue per mile of US airlines and SWA is the highest (HA behind Frontier and Spirit for 2023). They (SWA) and their desire to take over interisland are part of the reason Hawaii will lose its airline to Seattle based Alaska to survive SWAs growth. Also SWA has added to the congestion and resulting delays in the islands with more flights.

  6. According to industry analysts, SWA problems over the last several years happened before SWA hasn’t been investing in the future.
    They haven’t upgraded their flight management technology.
    They chose to spend their money on stock buybacks.
    Given that Watterston was in charge of SWA’s network,
    it’s a curious choice?

  7. My take is SWA will always be branded as the equivalent of someone who moves to Hawaii and starts speaking pidgin when they can’t even pronounce the street names. Operationally, flying a transpac 737 than using it for an inter island leg by a crew relatively inexperienced in Hawaii isn’t the only reason for their weak performance, but it’s a significant piece of it.

    1. SW’s introduction to Hawaii was a welcomed change. They may be a bit goofy, but they are nice. Easy to change your flights for island hopping, free bags and again, nice. As a result Hawaiian had to play catch up on customer service, and they have. Hate to think what will happen if SW leaves the market.

      1. Don’t disagree that competition is good. That said, SWA will always be the airline that came here with their self confessed. “Predatory “ attitude with no clue as to how offensive that is to many in Hawaii. They stated early on they were “after” Hawaiian because they were small and perceived as vulnerable. People here don’t like others moving here and trying to take advantage of the people that live here. Goes way back to the missionary days…some get it some don’t, but it’s nice to know how many do support the local carrier.

        1. They used to have a wooden shark with a SWA logo on it and jaws open about to eat two wooden little fish that had a HA logo on one and Alaska logo on the other hung up on the wall in their training center, they have removed it as they have now realized it may set a bad tone for folks to realize their true intentions, they used to be more forward about, they are now trying to pretend to play nice, but their intentions are to put HA out of business and then charge far far more than HA did for interisland (I just paid $552 RT LAS-RNO cheapest fare, which is slightly farther than HNL to Hilo). They are the reason Hawaii is going to lose its airline to Alaska, to survive SWA.

          1. Yeah, I saw that pictuer of the shark too. Wasn’t cool.. I have a bunch of former AQ friends at SW and they all said that it wasn’t at the training center.. It was in a small office at one of the nor-cal airport locations. They actually saw it with their own eyes. The person that put it up (non-flying, back office employee) was told that it wasn’t cool and were told to remove it, as it didn’t represent their company. I see it as kids playing stupid games, thinking it’s funny, and getting scolded by their parents. The only reason HAL is still around is because Mesa shut-down AQ, which was HAL’s only competition coming out of bankruptcy. Ask any AQ employee that went to HAL after the shut-down. HAL has always been on the verge of being out of business except for when they had zero competition. If the HAL acquisition happens, it’s not becasue of SW.. It’s because HAL has terrible leadership and Alaska sees them as a cheap way to grow by owning their competitor.

        2. I had the same perception, but went on to research and can’t find anything from SW that says they were “after” HAL. that’s a rumor started on an assumption. in fact, i have many family members who have been employees at HAL for a long time, and to be honest, they pushed that “theory” a lot. on the other hand, i also have many friends/relatives (former AQ employees) that have been working at SW since after AQ closed. they say that SW isn’t and was never interested in HAL or trying to shut HAL down. the only company that came in like a predator was Mesa against AQ. SW hawaii flying had everything to do with the fact that SW’s customers wanted to use their rewards points to come to hawaii, and SW wanted to keep their customers from switching to another company’s rewards program, because it’s really good revenue. interisland flying happened because the governor asked them to fly here, because HAL was ripping us off as the local carrier…

        3. Just like Hawaiian! Remember? Larry Ellison said Hawaiian did everything they could to run Island Air out of business! Sucks when your the small fish in the big pond and don’t have the money to compete. Losing over $1M a day must hurt! Oh well, too bad so sad!

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