On September 19, 2024, a Southwest Airlines Boeing 737 took off from Los Angeles International Airport in Los Angeles, California, bound for Las Vegas.
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Elliott Management said Tuesday it will Southwest Airlines “As soon as next week,” shortly after the company proposed a sweeping board shakeup, a move it hopes will avoid a proxy fight.
The move comes days ahead of the airline’s investor meeting, where it is expected to unveil improvements and operational changes. Elliott is seeking to oust CEO Bob Jordan and executive chairman Gary Kelly, who has pledged to step down in 2025. and a list of 10 directors made up of former regulators or government officials.
“We believe that capable new leaders should chart a path forward for Southwest through a thoughtful process,” Elliott partner John Pike and portfolio manager Bobby Xu said in a letter to shareholders.
“We don’t Supports the company’s current course, which has been haphazardly set by a group of executives in an entirely self-protective manner,” Pike and Xu wrote.
Southwest’s shareholder meeting is usually scheduled for May, but Elliott called for a special meeting in hopes of electing new directors much earlier than that. It will take several months for both sides to win over shareholder support, during which time a settlement is always possible.
Elliott said Southwest’s advisers were using so-called “false record dates” to limit the number of shareholders eligible to vote.
Southwest Airlines unveiled in July major changes Its business model is more than 50 years old: It will soon abandon open seating in assigned seats, offer seats with more legroom and higher fares, and start operating red-eye flights. Last week, chief operating officer Andrew Watterson warned staff to prepare for more “tough decision“Airlines are working hard to restore profits as they face rising costs and shifting travel patterns.
The company does not plan to furlough employees but may cut operations in certain cities and offer employees the opportunity to move to other bases, according to a person familiar with the matter.
Southwest Airlines will release a routine schedule update on Wednesday that will show flights through early June. Earlier this month, executive chairman and former CEO Gary Kelly said he would Step down after the airline’s shareholder meeting next year.
The Brotherhood of Aircraft Machinists, which represents Southwest machinists and has met with Elliott, said last week that the activist investor “made it clear that the vision for Southwest’s turnaround is that Robert Jordan will not continue as CEO, If Elliott can exert enough influence on the board,” other executives are likely to be replaced. “
“The need for change is urgent, and we may make a request for a special meeting as soon as next week,” Pike and Xu said.
Southwest Airlines did not immediately respond to a request for comment.
