DALLAS — Activist investor Elliott Investment Management said Tuesday it plans to call a special board meeting at Dallas-based Southwest Airlines “as soon as next week” to overhaul the company’s leadership.
The latest push comes just two weeks after Southwest announced a sweeping revamp of its board in hopes of preventing a proxy fight.
Elliott Investment Management had previously called for the ouster of Southwest Airlines CEO, Robert Jordan, and Gary Kelly, the airline’s chairman and former CEO, before Southwest announced six board members were stepping down and Kelly, executive chairman, would voluntarily retire in 2025.
In the letter to shareholders Thursday, Elliott, the New York-based hedge fund that recently disclosed an 11% stake in Southwest (more than the 10% required to call a special meeting), said it would call a meeting “in the coming weeks.” The letter named Oct. 7 as a potential record date to ensure shareholders can vote on their shares.
“Southwest’s management and board have chosen a go-it-alone path with the goal of obstructing a leadership change that is urgently needed,” Elliott partner John Pike and portfolio manager Bobby Xu wrote in the letter. “This path has featured a chaotic series of defensive actions, including a ‘poison pill,’ a hastily recruited new director, a half-baked announcement of changes to the Company’s product, and the sudden declaration that nearly half of the Board intends to resign in November.”
Pike and Xu also pointed to Southwest executives warning of “difficult times ahead” as they seek to boost revenue and profits.
“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,” they wrote. “In other words, we believe that competent new leaders, working through a deliberate and thoughtful process, should chart the course forward for Southwest.”
They said in the letter that Elliott had no say in the recent changes at Southwest but reiterated that Elliott is seeking changes to the board of directors, new leadership and a comprehensive business review.
Southwest Airlines previously said they intend to meet with Elliott on Sept. 26 during their Investor Day and "look forward to sharing details on our continued transformation."
Southwest said in a Tuesday statement, "Southwest has made every effort to reach a constructive resolution with Elliott, including over a dozen phone calls with Elliott representatives, several in-person meetings and an offer for Elliott to participate in the Company’s Board refreshment process and understand its views on Southwest’s business and strategy. It’s unfortunate that Elliott has not only completely failed to engage constructively, but today has continued its pattern of launching public ambushes and is seeking to disrupt Southwest’s upcoming Investor Day."
Read Southwest's full statement below