by Lacey Pfalz
Last updated: 8:55 AM ET, Mon October 21, 2024
Southwest Airlines and its activist investor Elliott Investment Management, which owns approximately ten percent of the airline, have begun discussing a potential settlement that will appease the investment firm by providing it with more representation on the airline’s board.
The news was covered by Reuters. Neither company has yet to comment on the news.
Elliott has been angling for greater control over the airline since June, when it sent the airline’s Board of Directors a letter proposing a complete overhaul of its board, a replacement of CEO Bob Jordan and other measures to bring the airline back into profitability.
The plan, called Stronger Southwest, has an entire website dedicated to its support, and recently launched a podcast on the topic. It’s also considered the major reason why Executive Chairman Gary Kelly, who’s been with the airline for 40 years, announced he was stepping down in 2025.
These new discussions could add representation for Elliott on the board of directors, but not a total control, which it had proposed. The settlement talks are in their early stages and could fall through.
This news comes following last month's announcement that the investment company formally requested a special shareholder meeting on December 10, with proposals to replace eight of the airline’s Board of Directors.
Southwest Airlines’ stock prices have plummeted 42 percent in the past five years. Despite that number increasing 8 percent this year, the airline is struggling to become profitable again, an issue which Elliott suggests is largely due to its “unacceptable” leadership. The airline also recently announced a new plan transforming the traveler experience, including a shift towards seat assignments.
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