The activist investor group Elliott Investor Management has ended its public campaign against Southwest Airlines after reaching a deal with the carrier to install its pick of five directors to the Southwest board.
The deal was announced on the same day that Southwest announced its financial results for the third quarter. CEO Bob Jordan said the airline was now “laser-focused” on executing a long-awaited transformation plan to improve Southwest’s financial performance.
Under the deal reached with Elliott on Thursday, Jordan will be allowed to stay on as chief executive despite Elliott’s previous opposition to him remaining in the position.
Outgoing Executive Chairman Gary Kelly will, however, “accelerate” his retirement and now intends to leave the airline on November 1. Kelly had previously agreed to step down from the board following discussions with Elliott but had hoped to stay on until early next year.
Crucial to the deal was the appointment of five of Elliott’s pick of seven potential directors to the Southwest board. These are:
- David Cush – former CEO of Virgin America
- Sarah Feinberg – a former senior official at the Department of Transportation
- Dave Grissen – former group president of Marriott International
- Gregg Saretsky – former CEO or Canadian airline WestJet
- Patricia Watson – serving executive vice president at NCR Atleos
Elliott did not, however, win places on the board for Michael Cawley the former deputy of CEO, COO and CFO of leading European low-cost airline, Ryanair, or Josh Gotbaum, former Chapter 11 trustee of Hawaiian Airlines.
Pierre Breber, the former CFO of Chevron, was also appointed to the board at the request of Southwest.
The appointments will take effect from November 1.
“We are pleased to have reached a collaborative resolution with Elliott, continuing our Board refreshment with the addition of new directors who bring complementary skills and experience,” commented Kelly as the news was made public.
“I am confident this Board will continue to hold the leadership team accountable for executing its transformational plan and delivering financial performance,” Kelly continued.
Southwest has announced a slew of strategic changes in the last few months in an attempt to improve its financial performance, including the demise of its famous open seating policy and the introduction of red-eye flights.
Southwest will begin to sell assigned seating from the second half of 2025, with the airline’s open-seating model coming to an end at some point in the first six months of 2026.
At the same time, Southwest will begin selling premium extra-legroom seats, with roughly one-third of seats offering up to five additional inches of pitch.
Red-eye flights will be introduced in February 2025, and Southwest hopes to reduce the ‘turn time’ between flights in order to drive increased aircraft productivity.
Southwest also intends to ink partnerships with international airlines in a bid to feed more passengers into its network. The carrier has already signed its first deal with Icelandair and hopes to secure a second deal within the next 12 months.
Elliott had called a Special Meeting, setting the scene for a bloody boardroom battle that could have decided the very future of the much-loved airline, but on Thursday, the activist investor withdrew the Special Meeting and closed down a campaign website.
“We are pleased to have come to an agreement with Southwest on the addition of six new directors that will enhance and revitalize its Board,” commented Elliott Partner John Pike and Portfolio Manager Bobby Xu.
“We believe the strategic changes Southwest has announced since we commenced our engagement, together with the new independent directors and governance improvements, will position the Company to enhance business performance, drive operational execution and evaluate additional changes to create long-term shareholder value.”
