The airline industry’s new motto seems to be: We’re all budget airlines now. But when everyone’s fares are cheap, it’s tough on longtime low-cost carriers like Southwest Airlines.

And at Southwest, there’s a loud, unruly passenger coming on board. The activist investor firm Elliott Management has built a $2 billion stake in the airline and is calling for the company’s top brass to deplane as the budget operator struggles. 

Barbarians at the Boarding Gate

Southwest’s most recent struggle came during the 2022 holiday season when its technology systems couldn’t weather a severe winter storm. While other airlines recovered, Southwest had to cancel about 17,000 flights, which cost the company more than $1 billion in losses in addition to a $140 million fine from the Department of Transportation. 

Southwest is also one of many victims of Boeing’s ongoing struggles and will receive far fewer jets from the plane maker this year than it had originally hoped, hampering its ability to expand. In April, it said it would terminate operations at three US airports and one in Mexico, and its costs have gone up because of new labor contracts with flight attendants. Southwest reported a loss of $231 million in this year’s first quarter, and it expects to lose 2,000 employees by the end of the year. 

Elliott Management — which is also trying to shake up SoftBank, Texas Instruments, and Johnson Controls — bowed to Southwest’s storied past, but is asking “What have you done for me lately?”

• With its $2 billion piece of the Southwest pie, Elliott is calling on the company to replace CEO Bob Jordan, revise its board of directors, and conduct a comprehensive business review, The Wall Street Journal reported.
• In a letter sent to the Southwest board, Elliott wrote “While Southwest has a proud history, that history is not an argument for supporting poor leadership and sticking with a strategy that no longer succeeds in the modern airline industry.” The attention lifted Southwest’s stock by 7% on Monday.

Take a Seat: Of the Big Four US airlines, Delta is the only one to see its share price grow in the last three years (10%). Plenty of Delta’s success can be attributed to its seating options. In 2023, revenue generated from premium tickets jumped 26% from the previous year. 

Southwest’s plan for returning to financial stability is still up in the air, but cribbing off Delta — or really any other airline — might be a solid plan. Southwest flights don’t have assigned seats, but fliers are able to pay extra to board earlier. The airline is considering a switch to different classes of seating to make up revenue. It turns out people will indeed pay more for more when you offer them so little.

As Europe lurches right, markets there are left to wonder. 

On Monday, Europeans across the bloc voted to advance the power of the region’s far-right coalition. In other words, as with most elections, things are a bit chaotic in Europe at the moment, and markets detest chaos. 

Far-Right to the Point

Europe’s various far-right parties increased their total control of the EU’s parliament to 25% from the roughly 20% of seats they’ve held since elections in 2019. That may not sound like much, and Ursula Gertrud von der Leyen, the bloc’s center-right president, remains firmly in power. But it’s enough to disrupt several major pieces of the EU agenda — namely, opposition to Vladimir Putin’s invasion of Ukraine, immigration, and climate change, arguably the coalition’s chief policy mandate in the past half-decade.

That’s more than enough to cast some murkiness on Europe’s future, prompting somewhat beleaguered French President Emmanuel Macron to call for a snap election in his own country — a move that could see his centrist party lose ground to Marine Le Pen’s nationalist party. 

All of which fogs the future of Europe’s economy, sparking plenty of intraday market turmoil:

• The euro, which had already weakened last week as Europe’s central bank slashed interest rates ahead of the US Federal Reserve, fell 0.5% against the dollar to a one-month low, per FactSet data.
• Meanwhile, investors ditched French government bonds, and the CAC 40, France’s blue-chip index, fell 2%, while the European Stoxx 600 was down nearly 1% in early trading before a small recovery. Société Générale, BNP Paribas, and Crédit Agricole — a trio of big EU banks — all saw share prices fall over 4%.

Adding Up: “The advance of the populist right and the French snap elections will further complicate decision-making in the multinational EU at a time when Europe needs to get its act together to stop Putin, enhance competitiveness, protect the climate, manage immigration, deal with China and prepare for a potential second term of Donald Trump in the U.S.,” Berenberg economist Holger Schmieding told The Wall Street Journal. Gee, it’s no wonder just about everyone is calling this election season one of the most consequential in history.

That’s the shot in the arm Moderna needed.

Moderna announced promising late trial results on Monday for a combined flu and Covid-19 vaccine. The trial showed the 2-for-1 jab was more effective on both illnesses than existing individual shots. If the company successfully brings the vaccine to market, it could help turn around the fading fortunes of Covid-19 vaccines. 

Two Birds, One Jab

Moderna rode to the rescue during the pandemic alongside companies like Pfizer, BioNTech, and AstraZeneca, producing Covid-19 vaccines at an astonishing pace. As the pandemic abated, however, demand understandably dropped, and the share prices of the companies that made them have mostly taken a steady pummeling. AstraZeneca is the one exception, and it withdrew its Covid-19 vaccine last month. 

Moderna’s share price is down some 67% since its 2021 peak, and by coupling its Covid-19 vaccine with a flu shot, it’s trying to get out of its pandemic funk. It will still be racing against its pandemic-era competitors, though:

• Moderna CEO Stéphane Bancel touted that Moderna is ahead of the game in making the combined vaccine. “Moderna is the only company with a positive Phase 3 flu and COVID combination vaccine,” he said in a statement.
• Both Pfizer and BioNTech are developing similar 2-for-1 jabs. Bancel told CNBC Moderna is hoping to get the vaccine onto the market by 2025.

Hitchcockian: While Covid may no longer be top of mind, a virus that freaked us out in the 2000s is back on everyone’s minds. Outbreaks of bird flu have prompted the European Union to order 40 million doses of avian flu vaccine this week from manufacturer CSL Seqirus. The Financial Times reported at the end of last month that the US government is close to bankrolling Moderna to research mRNA vaccines for bird flu, and Pfizer might get a look-in as well.