Southwest Airlines faces pressure from Elliott Investment Management as the hedge fund now holds a 10% stake in the company, giving it the ability to call a special meeting. This development comes ahead of a scheduled meeting between the two parties to address the challenges that have led to Southwest’s stock losing half of its value over the past three years.
Elliott Investment Management, known for its activist investor strategies and $70 billion in assets under management, is calling for the removal of CEO Robert Jordan and Executive Chairman Gary Kelly. The hedge fund also intends to nominate 10 directors to Southwest’s 15-person board.
While Southwest Airlines has taken steps to improve its image and stock price by implementing changes such as adding seats with more legroom and appointing a new board member, Elliott believes these efforts are insufficient and too late.
In response to Elliott’s actions, Southwest has put a shareholder rights plan in place to safeguard against an investor accumulating more than 12.5% of the stock. The airline is gearing up for a potential special meeting, a rare occurrence used to address urgent shareholder matters.
As the battle between Elliott and Southwest escalates, investors and industry watchers are closely monitoring the situation. Elliott’s track record of pushing for changes in companies like NRG, where the CEO ultimately resigned and the stock price saw a significant increase, underscores the hedge fund’s influence in corporate governance.
The financial landscape is ever-evolving, and strategic moves by influential investors like Elliott Investment Management can shape the future direction of companies like Southwest Airlines. Stay tuned for updates on this unfolding story and its impact on the financial markets.