Just over two weeks after activist shareholder Elliott Investment Management was revealed to have nearly a $2 billion equity stake in budget airline Southwest, the investment firm’s head, Paul Singer, is already experiencing a turbulent ride. 

Shares of Southwest plunged as much as 10% in premarket trading in New York, with some of those losses reversed as of 0815 ET, following news the airline slashed its guidance for revenue per available seat mile, a commonly used top-line metric also known as “RASM,” for the second quarter. 

Southwest wrote in a filing with the Securities and Exchange Commission that it expects a revenue per available seat mile decline of as much as 4.5% in the second quarter, down from a prior estimate of 1.5% to 3.5%. 

“Based on revenue performance to date, the Company now expects second-quarter 2024 RASM to decline in the 4.0 percent to 4.5 percent range compared with its prior expectation of a 1.5 percent to 3.5 percent decline, both on a year-over-year basis,” the airline said.

Southwest explained, “The reduction in the Company’s RASM expectations was driven primarily by complexities in adapting its revenue management to current booking patterns in this dynamic environment.” 

Despite the downward revision in RASM, the airline noted, “The Company continues to expect an all-time quarterly record for operating revenue in the second quarter of 2024.” 

In late April, Southwest shares tumbled after the company reported a wider-than-expected first-quarter loss and lower-than-expected revenue due to delays in Boeing jet deliveries. 

“The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025,” Southwest CEO Bob Jordan wrote in the company’s first-quarter financial results statement. 

Meanwhile, as of early April, Paul Singer has become one of Southwest’s largest shareholders and aims to turn the struggling airline around. However, someone should warn Singer not to elimate the ‘bags fly free’ policy or face a wave of angry passengers.