Southwest Airlines Lays Out Changes and New Offerings

Southwest Airlines announced a three-year plan on Thursday to revitalize its operation and customer offerings as it defends against an activist investor calling for new leadership and a strategy overhaul.

The plan expands on a series of changes by Southwest in recent months, including plans to add premium seats, introduce red-eye flights and replace its pick-your-own seating system with assigned seats, starting in 2026.

The airline said on Thursday that it would begin selling vacation packages and was partnering with international airlines, starting with a connection in Baltimore via Icelandair next year. It also announced a $2.5 billion share repurchase program and plans for operational changes, including speeding up how long it takes to get planes back in the air after they have landed and finding other ways to reduce costs.

Southwest shares were up about 7 percent on Thursday afternoon.

Bob Jordan, Southwest’s chief executive, presented the initiative during a meeting with investors and analysts on Thursday morning, calling it “the most transformational plan” in the airline’s history.

“We’ve laid out a plan that is built on the values and the principles that generated years of financial success and shareholder returns that garnered admiration, loyalty and love,” he said.

The airline is making the moves under rising pressure from an activist hedge fund, Elliott Management, which has amassed a stake of more than 10 percent, worth almost $2 billion. Elliott has said the airline is underperforming and has placed blame on Mr. Jordan, who has worked at the airline for decades.