Bob Jordan, Southwest Airlines, Tim Steve discussed on Bloomberg Businessweek


Bloomberg markets to close. Tim Steve, along with Carol master and romaine bostick on this Thursday afternoon of this shortened trading week shares of Southwest Airlines, ticker LUV actually closing higher today for the first time this week. This after following a combined 11% over the last two days. This is a result of the crisis that the company continues to face, though things are improving. For the latest now, we bring in Madison mills. She's with us in the Bloomberg interactive broker studio. Is the worst behind us or worse behind it for Southwest Airlines? They certainly hope so southwest canceled over 2300 flights today, but so far, only 39 flights canceled for tomorrow and we did just hear from southwest CEO. If you look on your terminal there and for our listeners, I'll just tell you about it. The CEO saying it's too early to estimate the cost of network disruptions and commenting in a media briefing saying that Southwest is going to reassess tech modernization plans in the wake of this crisis, but that this re upgrading of their tech system is going to be a multiyear process. So short term things are looking okay adding into Friday with those lower flight cancellations. But again, we're hearing from the CEO that that tech modernization plan in the wake of this crisis is going to be ongoing that's going to take a lot of time and a lot of investment in the years to come. Well, and it's kind of interesting. I do wonder about this CEO kind of coming out and saying this tech modernization. It's not a new story, right? This is something that he's been working on with his team. Exactly. And even though he's only been in the top job for ten months, he's been at the company for a long time, but we are hearing also we have a great report from our colleagues who are doing their best work covering this. They talk to communications and crisis managers who say that this is going to blow over that in the first quarter of 2023, we're going to see some issues, but that bob Jordan is actually doing a good job apologizing. You guys have talked about this for the past couple of days when I brought this up. You know, people have a short memory when it comes to this type of stuff. And if they're loyal to an airline or they shop based on price or building price, they just got their fares for the next few months. I think they'll be okay. In all seriousness though, I mean, there's a sort of a process and one of the headlines that we heard out of Jordan's idea that this is going to be a multiyear process to upgrade these IT systems. Of course, a process that a lot of people think should have started several years ago here. Give us a sense as to what we know as to what they have to do and why I would take that long. I think the biggest thing is the ITP is they have a system that is really important because they operate off of this point to point systems. So these airplanes could be anywhere. That's why they called the Greyhound of the sky and if you're going to have planes all over the place. I think it's been a couple of decades since I've been on a Greyhound, but I'm not sure that's a compliment. I feel like it's a sign of how nim accessibility. The accessibility, right? Okay, so that allows them to keep their balance sheet really tight, but it also means that they've got to be on top of it. One interesting thing though, I mean, we talk about sort of what made southwest what it is. A somewhat quirky culture, the idea of not just low cost fares, but it made the whole process easier for a lot of folks at least relative to the other airlines. Does that get lost in this? It is a bit of a PR nightmare, obviously, for Southwest, and that's why there is going to be a lot of renewed pressure heading into the first quarter of 2023 to have really cheap airfares to rebuild some of that trust with customers. Yeah, I mean, we talked about this yesterday. This has been so much a part of what the culture is at Southwest. They do it differently. And as a result, you don't have to pay as much to fly with them. But this is one thing that if it happens once, but if it happens again, then it becomes much more problematic for the company. In terms of branding and loyalty by its customers. And it's probably a little bit of a shock to the system, especially for bob Jordan because they had such a great Thanksgiving. They were doing a lot better than other airlines. So he was feeling great, heading into Christmas, and then this winter storm just. Then this is no easy time. I mean, anyone who's had a chance, and I've been lucky enough to be in some of the control towers. And you see what it takes to kind of keep these planes moving, keep people moving. I want to go. So it is an extraordinary problem. And this is like, it's literally like, you know, mathematical jiu-jitsu that these people have to do to keep everything going. But what I think is interesting about this is we saw some struggles in the past with united and delta. This was years ago before they modernize their systems. Were they kind of went through something similar? And I don't know if there was a lasting effect on that. Actually, listen in terms of public perception. I mean, I know we all have our own favorite airlines, and we like to dig at this one versus that one. But overall, those companies are doing just fine. They are. And I mean, this week, if you look at this as an example today, or yesterday, rather on Wednesday, we saw less than 40 flight cancellations from Delta JetBlue united, delta one with only 15 cancellations and over 2500 cancellations from southwest. Those numbers are just such a stark difference between these airlines. Another thing that I should mention also, we talk about the tech side of Southwest needing to be upgraded, but one example, I heard from a gate agent who was talking about this on TikTok this week, she said that they were communicating lost baggage via pen and paper back in 2017 all the way until now. So that's just one example of the just right that an apple tag inside your luggage so you know where it is. So you know where it's stuck, Carol. So you know where it's stuck. You can always find it. Yeah, I do wonder what the longer term story is. I mean, as I said, I think if they mess up again, then it's a problem, but what about, what about regulators? Do regulators have? So with Apple tags, you have to be within a certain distance. No, you don't. You don't have to do this. You see it. It turns it into this was like a big Christmas present in 2021. I got to get you some airtags. The way that they work is they sort of use everybody with an iOS device as a Beacon. Unwittingly being used as a Beacon for my AirTag that's in my bag on my keys right now. Okay, so you would know that if your bag was still stuck in Texas. Yeah, based on people who are iPhones around. You would just know it's there. You can't actually do it. You can actually get anyone Romain on your phone. My family, yeah. Yeah, it's like the same thing. Find my Friends. What about a wonderful life? I'm your 12 hours a day. I know you're at 7 31 lives. In a car and I'm on the way home. What do you keep it on your radar when it comes to southwest at this point? You have a great life. To me, the big question is gonna be how they use that $2 billion investment. The cocktail thing today, weren't you? That's tomorrow mythologist or something. That's tomorrow right now. Oh, that's tomorrow. Yeah. We're doing marijuana. That's what help Romain now. We are. Yeah. Okay, but speaking of cocktails actually, they are offering a lot of drink vouchers. So

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