Activist investor Elliott Management is seeking to install its pick of 10 new board members on the Southwest Airlines board in a bid to push a major leadership and strategy change at the embattled Dallas-based carrier.
Elliott has managed to acquire an 11% stake in Southwest and is now hoping to replace ten of Southwest’s 15-strong board with its own independent picks from the airline, hospitality and technology industries.
Amongst Elliott’s boardroom picks are the former CEO of Virgin America, David Cush, former group president of Marriott International, Dave Grissen, and the former CEO of Canadian airline WestJet, Gregg Saretsky.
The other proposed board members are Michael Lawley, who held the positions of CEO, COO, and CFO at Europe’s Ryanair; former senior Department of Transportation official Sarah Feinberg; former Chapter 11 trustee of Hawaiian Airlines Josh Gotbaum, serving Meta board member Nancy Killefer, former CEO of Air Canada and CEO of United Airlines Robert Milton, the former head of technology at JetBlue Eash Sundaram and the serving chief technology officer at retail banking company NCR Atleos Patty Watson.
Announcing its proposed board members, Elliott said the “urgency of change is underscored by the substantial continued deterioration in Southwest’s performance.”
“When nominated, these Candidates would give shareholders a choice between the Company’s existing Board, which has delivered poor returns for shareholders and has not held management accountable for Southwest’s unacceptable performance, or a new Board that brings relevant expertise, fresh thinking and accountability,” the statement continued.
Elliott is hoping to oust Southwest’s serving leadership team, including incumbent CEO Bob Jordan, in a bid to shake up the carrier’s business model.
Last month, Jordan announced major changes to Southwest’s strategy, including ending its famous open seating policy, introducing extra-legroom premium seating options, and starting red-eye flying for the first time in the airline’s history.
Elliott slammed the proposed changes as “too little, too late” and said the only way to shore up Southwest’s lagging financial performance was to replace the current leadership team.
The activist investor firm hasn’t set out exactly how it would change Southwest’s business model to improve the airline’s performance but on Tuesday, Elliott said its board picks had the right mix of “backgrounds and expertise to address Southwest’s current challenges and deliver on the Company’s potential”.
Southwest’s leadership team and serving board have sought to resist Elliott’s involvement in the airline and in July, the board approved a so-called ‘poison pill’ to frustrate any attempt by Elliott to increase its stake in Southwest.
The ‘poison pill’ will kick into effect if any one investor acquires a 12.5% or more stake in the airline. It will allow other shareholders to buy shares in the company at a reduced price, thereby diluting Elliott’s stake in Southwest.
