Elliott targets Southwest Airlines board in bid to shake up leadership, sources say

By Svea Herbst-Bayliss

NEW YORK (Reuters) -Elliott Investment Management is launching a boardroom battle at Southwest Airlines (NYSE:LUV ), hoping to replace as many as 10 directors as the hedge fund pushes to oust the airline's chief executive officer and improve performance, sources said on Tuesday.

The hedge fund has been interviewing candidates for the 15-member board and is working toward being able to call a special meeting where investors could vote on the nominees, the people said.

Elliott said in a regulatory filing last week that it has a 7% beneficial ownership, putting it closer to the stake required to call a special meeting.

The hedge fund has pushed to replace both Robert Jordan, who became CEO in 2022, and Executive Chair Gary Kelly, who had been CEO before Jordan.

The company did not immediately respond to a request for comment.

The Wall Street Journal first reported the news of Elliott's plans to nominate directors.

The airline, whose stock price has fallen 24% in the last 52 weeks, has tried to fix some of its problems and named a new board member in July.



At Southwest, an investor may call for a special meeting only if that investor owns 10% of the company's common shares. At the moment, Elliott owns less than 10% in common stock, but the hedge fund has been accumulating common shares rapidly, last week's filing said.

Southwest reacted to Elliott's investment by adopting a shareholder rights plan or poison pill that would kick in after one investor acquires 12.5% or more of the stock and allow other shareholders to buy more stock at a discount to try and prevent a takeover.  

Source: Investing.com