The activist investor Elliott Investment Management, which has acquired a big stake in Southwest Airlines, has told shareholders that it could call a special meeting within weeks, setting the scene for a bloody boardroom battle that could decide the very future of the much-loved Dallas-based carrier.
In a new open letter to shareholders on Tuesday, Elliott told shareholders that it is “our intent to formally call a special meeting in the coming weeks.” The meeting would allow the activist investor to discuss major company changes, including shaking up Southwest’s leadership and board members.
“Since becoming large investors in Southwest, it has been our goal to collaborate with the Company to restore accountability and best-in-class financial performance,” the open letter explained.
“Unfortunately, Southwest’s management and board have chosen a go-it-alone path with the goal of obstructing a leadership change that is urgently needed.”
Since Elliott publicly announced in June that it had acquired a significant minority stake in Southwest, the firm has been pushing for major changes that it believes are necessary to improve the airline’s lagging financial performance.
Southwest initially resisted Elliott’s involvement, refusing to change up its leadership and implementing a so-called ‘poison pill’ that is meant to make it harder for activist investors to buy shares in a company.
Over the last few months, however, Southwest says it has “made every effort to reach a constructive resolution with Elliott,” which has resulted in board chair Gary Kelly agreeing to retire immediately after the 2025 annual meeting next May.
The airline has also agreed to consider some of Elliott’s choices for new board members, although Southwest CEO Bob Jordan has refused to step down as demanded by Elliott and the two sides seem far apart on many issues.
Southwest has already announced some changes to improve its financial performance, including the decision to end its famous open seating policy, installing premium extra legroom seats, and introducing red-eye flights for the first time.
Further changes are expected to be announced at Southwest’s upcoming investor day, although the airline recently warned staffers in an internal message that “difficult decisions” needed to be made that could impact employees.
In response, Elliott slammed in its letter to shareholders: “Let us be clear: Whatever ‘difficult decisions’ management has decided must be made, they are the product of a failed management team that has delivered years of deteriorating performance and is now taking any action – no matter how short-sighted – that they believe will preserve their own jobs.”
“We believe that competent new leaders, working through a deliberate and thoughtful process, should chart the course forward for Southwest. We do not support the Company’s current course, which is being charted in a haphazard manner by a group of executives in full self-preservation mode.”
