Southwest Airlines and Elliott Investment Management are gearing up for a showdown as they plan to meet on September 9th. However, despite the scheduled meeting, Elliott has made it clear that they will move forward with a plan to initiate a proxy vote for their hand-selected slate of 10 board members if the current board doesn’t engage in a conversation about replacing chairman Gary Kelly and CEO Bob Jordan.
Elliott’s Perspective
Elliott, with an 11% stake in Southwest Airlines valued at $1.9 billion, blames the current leadership for declining margins, a plunging share price, and a failure to keep up with evolving consumer preferences. They believe that the board has failed to hold Kelly and Jordan accountable and is now pushing for shareholder intervention to determine who should be leading Southwest.
Southwest’s Defense
In response to Elliott’s accusations, Southwest has taken a defensive stance by adopting shareholder-rights provisions and adding a new board member with experience in airlines other than Southwest. The airline has also made efforts to engage with Elliott and remains open to discussions that would benefit shareholders.
Despite Southwest’s attempts to appease Elliott, the investment firm appears to be determined to push their proposed changes in leadership. Elliott’s open letter to shareholders suggests that Kelly is leading a process to add new directors as a way to maintain his position, a claim that Southwest has not responded to directly.
As the September 9th meeting approaches, both Southwest Airlines and Elliott Investment Management are preparing for a potentially contentious discussion. Southwest has announced plans to share more details about its transformation at an investor event on September 26th, indicating that they are committed to driving sustained shareholder value.
The battle between Southwest Airlines and Elliott Investment Management highlights the complex relationship between shareholders and company leadership. While Southwest is making efforts to address Elliott’s concerns, the investment firm is standing firm in its demand for change. The outcome of their upcoming meeting could have significant implications for the future direction of Southwest Airlines and its leadership structure.