The war of words between Southwest Airlines and minority shareholder Elliott Investment Management continues as the airline refutes Elliott’s request to hold a special shareholder meeting later this year.
The Dallas-based carrier said early on 15 October that the request for the meeting – where Elliott intends to oust the airline’s chief executive as well as eight members of Southwest’s board and install its own candidates – is “unnecessary and inappropriate”.
“The timing of Elliott’s request to apparently pursue board control appears designed to maximise disruption of Southwest’s execution of its important business transformation underway as we approach one of the busiest travel periods of the year,” Southwest’s directors say. “Elliott’s actions highlight its lack of understanding of Southwest’s business and its insatiable need to put its own interests ahead of those of all shareholders.”
Elliott, which holds 11% of the company’s shares, on 14 October made the formal request, saying it was pursuing “the need for improved oversight” over Southwest. It named eight board candidates who it regards as more qualified to lead the airline after a rocky year.
The carrier said it will evaluate Elliott’s request for a meeting on 10 December, but that it has already made “every effort to reach a constructive resolution” to the conflict with its shareholder.
“Unfortunately, Elliott remains entrenched in demanding control of the board, while continuing to block its director candidates from being interviewed by the board’s nominating and corporate governance committee, making it impossible to find a constructive resolution,” Southwest says. “For nearly four months, Elliott has failed to offer any substantive feedback on Southwest’s strategic plan.”
Southwest also warns other shareholders of Elliott’s possible nefarious aims.
“Elliott’s failure to provide actionable feedback [to Southwest’s strategic pivot], coupled with the disruptive nature of its demands, should give shareholders pause about Elliott’s true intentions,” Southwest says.
The airline is digging out from a series of blunders in recent months. Its board continues to support chief executive Bob Jordan as “the right leader to successfully execute Southwest’s plan”. That plan, which it calls “Southwest. Even Better.”, 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.
In September, Southwest signalled it would partially capitulate to Elliott’s demands, 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.
On 25 September, the day before Southwest held an investor event to detail those plans, Elliott published a strongly worded letter to fellow investors accusing Southwest’s board of incompetence. At the investor day, chief executive Bob Jordan responded, saying Elliot’s criticism of airline management is “inane”.
“The board has high expectations for Jordan and the leadership team and will continue to hold them accountable for delivering results,” the airline says.
