Elliott Investment Management is taking its fight with Southwest Airlines to investors by calling a special shareholder meeting, where they can vote on new director candidates who will ultimately steer the company’s strategy.
In calling the meeting, Elliott is taking a highly unusual step, but one that he has telegraphed for weeks after concluding that recent changes made by the carrier have failed to ensure real improvements.
Southwest, which has a market capitalization of $18.45 billion, did not immediately respond to a Reuters request for comment.
Elliott, the Paul Singer-founded company that oversees about $70 billion in assets and owns 10% of Southwest’s common stock, sought to replace some board members, remove Chief Executive Bob Jordan and improve financial performance. It has insisted for months to review its strategy. And increase the share price.
On Monday, the hedge fund said it was officially calling a special meeting to be held in December and submitted proposals to replace eight directors and take control of the board. The last annual meeting of the company was held in May 2024.
“Absent a thorough restructuring of its board, Southwest’s story will remain one of empty promises and unfulfilled potential,” Elliott partner John Pike and portfolio manager Bobby Xu said in a statement.
The board currently has 15 members but the number will be reduced to 13 next month and 12 at the annual meeting next year.
Southwest Airlines, which has been struggling to remain profitable since the COVID-19 pandemic, has taken steps to transform the business, including adding seats with more leg room and removing its marquee open seating system.
Last month, the airline Unveiled several initiatives To boost declining profits, including partnerships, vacation packages for customers, and aircraft sale-leasebacks.
It also added a new director earlier this year and said six directors would leave in November and executive chairman Gary Kelly would leave in May next year.
Southwest’s share price has fallen 42% over the past five years but is up 8% in 2024 and was trading 0.6% lower at $30.45 on Monday morning.
Bloomberg first reported The news came Monday, before Elliott released his statement.
Elliott met with the carrier last month, but earlier he described the company’s course as “disorganized” and run by a group of executives in “full self-preservation mode.”
The hedge fund’s proposed eight director candidates are executives with industry and regulatory experience, including Michael Cawley, who served as deputy CEO at Ryanair, and David Kush, who served as CEO of Virgin America.
Although the hedge fund did not explicitly target Jordan for ousting by its candidates, people familiar with Elliott’s thinking said the company is committed to installing new executives, including a CEO, after saying for several months that it would That they have to go.
Since its position at Southwest became public a few months ago, Elliott has stuck to a three-pronged strategy. First, it wants to refresh the board with independent industry experts that could pave the way to its second and third goals of holding management accountable and ultimately driving better financial performance, the people said.
