DALLAS — Elliott Investment Management, the activist investor aggressively pushing for changes at Dallas-based Southwest Airlines, has control of the 10% of shares required to call a special meeting at the carrier, Reuters reports.
The two sides are set to meet Sept. 9 to discuss potential solutions to problems that contributed to the airline’s stock losing about half its value over the last three years. Elliott has been pushing for changes at Southwest since disclosing a large stake in the carrier earlier this summer.
The New York-based hedge fund disclosed an 11% economic stake through derivatives, having converted enough of those holdings into common shares to cross the 10% threshold, Reuters reported.
Elliott Investment Management has called for the ouster of Southwest Airlines CEO Robert Jordan and Gary Kelly, the airline’s chairman and former CEO, and outlined plans to nominate 10 candidates to the airlines’ 15-member board of directors. Elliott's slate of potential nominees includes former CEOs of Air Canada, Canadian low-cost carrier WestJet and Virgin America, former senior executives at JetBlue and Ireland’s Ryanair and a former U.S. Transportation Department official, among others.
“As Southwest’s thousands of hard-working employees know, Southwest’s culture is much bigger than these two individuals – and this culture deserves better stewards,” Elliott wrote in an open letter to Southwest shareholders last week.
Reached for comment by WFAA Tuesday, Southwest Airlines said, “we remain prepared to meet with Elliott next week and look forward to sharing details on our continued transformation at our Investor Day on Sept. 26.”
Jordan, who’s served as Southwest’s CEO since 2022, has said he won’t resign and signaled to staff that he and other executives intend to fight Elliott.
Elliott signaled to other investors that it’s ready for next steps, including potentially calling a special shareholder meeting unless the company is willing to discuss leadership changes.
After Elliott announced a significant stake in the company, Southwest adopted a shareholder rights, or so-called ‘poison pill’ plan, that makes it harder for any one shareholder to accumulate more than 12.5% of the stock.
“Instead of embracing responsible governance and a spirit of collaboration…Mr. Kelly and Mr. Jordan have resorted to entrenchment tactics – so-called ‘poison pills,’ one-off announcements of long-overdue changes, and a rushed, unilateral Board refreshment process that lacks legitimacy," Elliott continued in the open letter. "This is not how company leadership demonstrates confidence in its plans and establishes credibility with shareholders; it is how failed corporate leaders attempt to preserve their own jobs and perquisites, despite the wishes of the company’s constituents.”
Elliott Investment Management manages nearly $70 billion in assets as of June 30.