Southwest Airlines chief executive Bob Jordan blasted minority shareholder Elliott Investment Management’s latest criticisms as “inane” during Southwest’s 26 September investor day in Dallas.
Jordan was provoked by Elliot’s strongly worded 25 September letter, which suggests incompetence on the part of Southwest’s leadership team. The letter calls for a special investor meeting to make shareholders “aware of certain defensive actions that Southwest’s leaders are taking, apparently in an attempt to disenfranchise shareholders and evade accountability for their poor performance”.
Notably, the letter calls Southwest’s newly unveiled plan to overhaul its business model amid a difficult environment for domestic and low-cost carriers “half baked”.
But Jordan maintains the plan is the product of a long and thoughtful development process that included a third-party study of its customer experience.
Southwest detailed its broad transformation plan to reporters at its Dallas headquarters on 26 September. The plan includes breaking away from its decades-old open seating model in 2026, forming partnerships with international carriers and installing new “premium” coach seats in its aircraft starting next year.
Jordan addressed Elliott’s call for a special investor meeting by maintaining that a “proxy fight” is not in Southwest’s best interest.
“We remain willing to work with Elliott on a cooperative approach,” Jordan says. “We have demonstrated that willingness time and again through our attempts at engagement. But time and again, Elliott has demonstrated little or no interest in collaborating with Southwest on how to deliver more shareholder value – focusing instead, as evidenced by the most-recent letter and recent action, on tactics and on gamesmanship.”
Elliott holds an 11% stake in Southwest and has in recent months directed sharp criticisms at the carrier, calling for a major overhaul of the company’s board and replacement of Jordan as CEO.
Earlier this month, Southwest signalled it would partially capitulate, announcing the resignation of six board members and saying that executive chairman and former chief executive Gary Kelly will retire following Southwest’s annual meeting in 2025. But the board reaffirmed its confidence in Jordan.
And Southwest has shown willingness to change a model that endured for decades before faltering in the post-pandemic landscape.
“I hope you can tell that the plan we presented today is intentional. It’s detailed, it’s well-constructed, it’s integrated, and it has been… in the works, including execution, for a long period of time,” Jordan says. “For Elliott to call that plan rushed and haphazard is, in my opinion, inane.”
“We refuse to let anything distract us from running a safe and reliable operation, and I refuse to let Elliott distract from executing our plan, which I believe will create substantial value for Southwest and our shareholders,” he adds.
