Activist investor Elliott Management is calling for leadership changes at U.S. discount carrier Southwest Airlines (LUV), including replacing the chief executive officer (CEO) and overhauling the board of directors.
Saying it will engage in a proxy fight to get its way, privately held hedge fund Elliott Management is calling for a board committee to undertake a review of Southwest’s business to drive “transformational change” at the airline.
In a letter to Southwest’s board of directors that has been leaked to the media, Elliott Management has warned that if current management doesn’t make changes that are in the best interests of shareholders, it will proceed with a board challenge.
Already, Elliott Management has publicly called for an overhaul of Southwest’s board of directors and for the ouster of top executives, including current CEO Robert Jordan.
Earlier in August, Elliott outlined plans to nominate 10 new directors to Southwest's 15-person board, including former Air Canada (AC) CEO Robert Milton.
The attack by Elliott Management comes as Southwest struggles with a turnaround plan that has included adding seats with more leg room and naming a new board member in July.
Elliott is pushing hard for current Southwest CEO Jordan and his predecessor and current executive chairman Gary Kelly to be replaced.
In its letter, Elliott wrote that Southwest’s current leadership i accountable to shareholders and not a “monarchy.”
Elliott Management has taken an 8% ownership stake in Southwest and is threatening to call a special shareholder meeting where investors will vote on new board members at the carrier.
The stock of Southwest Airlines is currently trading at $28.18 U.S. per share, which is 46% lower than where it was at five years ago.
The carrier and its stock have never recovered from the Covid-19 pandemic that struck in 2020.
