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Executives at major companies are increasingly discussing the upcoming presidential election, with mentions of "election" rising to the highest level since 2004. Concerns about economic stability and consumer behavior are prevalent, as leaders anticipate potential impacts on their businesses amid a tight race between Kamala Harris and Donald Trump. Many firms are adopting a cautious approach, with some executives noting a pause in hiring and investment decisions linked to election uncertainty.
Elliott Investment Management, a $70 billion activist hedge fund, successfully pressured Southwest Airlines into negotiations after publicly calling for a special shareholder meeting. The airline opted to concede rather than engage in a proxy fight, granting Elliott significant demands and enhancing its reputation in the competitive activist landscape.
Southwest Airlines Co. has appointed six new board directors as part of a deal with Elliott Investment Management, aimed at addressing the activist's demands and supporting the CEO's position. The new members, effective November 1, include former Chevron CFO Pierre Breber, ex-Virgin America CEO David Cush, and former federal railroad administrator Sarah Feinberg, among others.
Southwest Airlines reported a third-quarter profit that exceeded Wall Street estimates, despite a 65% decline in net income year-over-year. The airline forecasts a 3.5% to 5.5% increase in unit revenue for the fourth quarter, driven by strong travel demand, while costs are expected to rise significantly. Additionally, Southwest plans to implement major changes, including charging for seat selection and a $2.5 billion stock buyback.
Southwest Airlines Co. reported third-quarter profits that more than doubled Wall Street's expectations, with adjusted earnings of 15 cents per share, surpassing the 7-cent forecast from analysts. Revenue reached $6.87 billion, slightly above the anticipated $6.81 billion. This financial boost comes as the airline navigates challenges from activist investor Elliott Investment Management.
Elliott Investment Management and Southwest Airlines are close to a settlement that would prevent a proxy fight for board control. Discussions indicate that Elliott may secure several board seats, though not a majority. An announcement could come as early as Thursday.
Stocks continued to decline, with the Dow and S&P 500 marking a third consecutive losing day. American Airlines and Southwest Airlines are set to report earnings, with American up 22% and Southwest up 13% over the past three months. In the utilities sector, Entergy and Consolidated Edison reached all-time highs, while Honeywell is next to report in a week filled with industrial earnings. Microsoft and Nvidia are also in focus, with both companies showing significant gains this year.
S&P 500 futures remained stable after the index experienced three consecutive days of losses, with the Dow dropping over 400 points, marking its largest decline since early September. In after-hours trading, Tesla surged 11% following strong quarterly earnings, while IBM fell nearly 3% due to disappointing consulting revenue. Analysts suggest the recent sell-off may be temporary, with expectations of a market rebound post-November's U.S. presidential election. More earnings reports are anticipated from major companies on Thursday.
Earnings season is in full swing, with major companies like Tesla, IBM, and General Motors set to report this week. The S&P 500 has seen a 23% gain this year, and earnings are expected to grow 5%-7% this quarter, led by Information Technology, Communication Services, and Healthcare sectors.Economic indicators are also in focus, with Durable Goods orders anticipated to fall 4.5% year over year. Retail Sales exceeded expectations in September, rising 0.4%, while mortgage rates have climbed to 6.44%. The next Fed rate decision is expected on November 7, with a 90% chance of a 25-basis-point cut.
Southwest Airlines Co.
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