Elliott Investment Management has been putting pressure on Southwest Airlines by publishing a list of ten candidates that it wants to see on the carrier’s board. The nominees include four former airline CEOs and deputy CEOs, as well as individuals from complementary sectors. Elliott has engaged in a public battle with Southwest since taking a $1.9 billion stake in the airline in June. The activist investor is pushing for leadership changes to improve the airline’s performance and accountability.
Among the nominees are individuals such as Michael Cawley, David Cush, and Dave Grissen, all of whom have significant experience in the aviation and hospitality industries. Elliott claims that these nominees offer shareholders a different approach and fresh thinking that Southwest’s current board has failed to deliver. The hedge fund has been critical of the airline’s leadership, particularly CEO Bob Jordan and executive chair Gary Kelly, and has pushed for their replacement.
Southwest has responded to Elliott’s nominations with a strongly worded statement, accusing the hedge fund of dismissing the airline’s efforts to engage constructively and improve governance. The airline highlighted its appointment of eight new independent directors over the past three years as part of its continued efforts to refresh the board. Southwest has faced challenges in 2024, including Boeing delivery delays, labor costs, and demand for premium travel. The company reported a decrease in net income in the most recent quarter, prompting urgent steps to mitigate revenue challenges and drive growth.
In response to the pressure from Elliott, Southwest is making significant changes to its business model, including transforming its boarding policy, adding premium seating, and introducing red-eye overnight flights. These initiatives are part of a larger transformational change aimed at staying relevant to consumer preferences and increasing revenue. Despite these efforts, Elliott is pushing for additional changes and a bigger shake-up at the airline. Southwest is expected to announce further details of its transformation during an investor day event in late September.
Bob Jordan, who has resisted calls to step down as CEO, is scheduled to speak at the Skift Aviation Forum in November. The ongoing battle between Elliott and Southwest reflects the challenges facing the airline industry and the pressure on companies to adapt to changing market conditions. The outcome of Elliott’s campaign to shake up Southwest’s board remains uncertain, but it highlights the growing influence of activist investors in the airline sector and the need for companies to respond to shareholder demands.
