Southwest Airlines and Elliott Investment Management are in the midst of discussions for a possible settlement that could lead to the activist investor having a significant presence on the airline’s board. The talks are centered around an agreement that would grant Elliott some board representation while stopping short of full control. This development comes as Southwest’s board is set to reduce to 12 members with the upcoming departure of Chairman Gary Kelly.
While the settlement talks are still in the early stages and there is no guarantee of an agreement being reached, sources familiar with the matter have indicated that Elliott may end up with fewer than six selections on the board. Elliott Investment Management had previously called for a special meeting at Southwest Airlines after revealing an 11% stake in the company. The activist investor has expressed intentions to remove CEO Bob Jordan and make substantial changes to the airline’s strategic direction.
Despite the pressure from Elliott, Southwest Airlines has stood by CEO Bob Jordan, who has been with the company for nearly 40 years. Jordan has been tasked with implementing significant changes to the airline’s business model in order to drive revenue growth and enhance competitiveness in the industry. Southwest recently announced plans to transition away from its traditional open-seating model and introduce additional legroom seats to cater to evolving consumer preferences.
During an investor event, CEO Bob Jordan outlined a three-year plan aimed at increasing earnings before interest and taxes by $4 billion in 2027. Additionally, Southwest authorized a $2.5 billion share buyback program and made adjustments to its flight schedule in Atlanta to improve profitability. The airline is scheduled to report its third-quarter financial results soon, following an upward revision in its revenue forecast for the quarter.
Southwest Airlines’ strategic initiatives and efforts to adapt to changing market dynamics have garnered investor interest and contributed to a positive outlook for the company. As discussions with Elliott Investment Management progress, stakeholders will be closely monitoring any developments regarding potential board representation for the activist investor.
