Elliott Investment Management L.P. intends to file a proxy statement with the US Securities and Exchange Commission and has named ten candidates for the board of Southwest Airlines (WN, Dallas Love Field) as it steps up its campaign against the carrier.

In an August 13, 2024, statement, 11% Southwest shareholder Elliott said the proxy statement was "a key step towards implementing urgent changes at Southwest." A proxy statement (otherwise known as a Form DEF 14A) is a statement an entity or individual must submit ahead of an annual meeting when soliciting shareholder votes. Elliott will call a special meeting rather than waiting for the airline's annual shareholder meeting.

Elliott, frequently referred to as an activist investment fund, managed assets valued at approximately USD69.7 billion as of June 30, 2024, including 48,948,500 common Southwest shares either directly held by it or through subsidiaries. Elliott says Southwest presents as "the most compelling airline turnaround opportunity in the last two decades," and has previously called for changes in the airline's strategy and board, including the ousting of CEO Robert Jordan.

Elliott's Southwest board nominations

Elliott's so-called Stronger Southwest plan calls for the restoration of the efficiencies required to continue offering low fares, updating the product offering to align with current passenger preferences and expectations, improving management capabilities to ensure strong operational performance, and facilitating the investment in technology and new assets to run a reliable operation. Elliott's board nominations include:

  • Michael Cawley, the former deputy CEO, COO, and CFO of Ryanair (FR, Dublin International). Cawley holds 19,765 Southwest common shares;
  • David Cush, the former CEO of Virgin America (San Francisco), who holds 10,000 Southwest common shares;
  • Sarah Feinberg, a former senior official at the Department of Transportation and former head of the Federal Railroad Administration, who holds 3,068 Southwest common shares;
  • Josh Gotbaum, a longtime advisor to companies and labor groups and the former chapter 11 trustee of Hawaiian Airlines (HA, Honolulu), who holds 19,162 Southwest common shares;
  • Dave Grissen, the former group resident of Marriott International;
  • Nancy Killefer, a former McKinsey senior partner in the firm's consumer and retailing practice and current board member of Meta;
  • Robert Milton, the former CEO of Air Canada (AC, Montréal Trudeau) and ACE Aviation Holdings and the former chairman of United Airlines (UA, Chicago O'Hare), who holds 1,953 Southwest common shares;
  • Gregg Saretsky, the former CEO of WestJet (WS, Calgary), who holds 4,000 Southwest common shares;
  • Eash Sundaram, the former chief digital and technology officer of JetBlue Airways (B6, New York JFK), who holds 2,000 Southwest common shares; and
  • Patty Watson, the current EVP and chief information and technology officer at NCR Atleos, and a long-time technology executive, who holds 5,086 Southwest common shares.

"When nominated, these candidates would give shareholders a choice between the company's existing board, which has delivered poor returns for shareholders and has not held management accountable for Southwest's unacceptable performance, or a new board that brings relevant expertise, fresh thinking and accountability," Elliott's statement reads.

Southwest's response

Southwest says it has tried to constructively engage with Elliott since it launched its campaign. "Elliott has dismissed those efforts at every turn," an August 14 statement from the airline reads. Southwest says that it had scheduled a meeting with Elliott in September to discuss board and governance changes, but "Elliott unilaterally decided instead to publicly announce its intention to replace a majority of Southwest Airlines' board."

While Southwest said it remains open to conversations with Elliott and would evaluate the proposed nominees as part of its ongoing board refreshment process, the existing board "remains confident that the airline has the right leadership team in place to evolve the business and to lead Southwest Airlines forward." The statement said the airline remained focused on restoring its financial performance and building a sustainable and profitable future.

"Southwest Airlines will provide additional details on a comprehensive plan to transform its business, improve operational efficiency, and deliver capital allocation discipline during its Investor Day in late September," the airline's statement added.

Southwest's current 15-person board includes Chairman Gary Kelly, Vice Chairman Robert Jordan, Lead Director William Cunningham, Lisa Atherton, David Biegler, J. Veronica Biggins, Roy Blunt. Douglas Brooks, Eduardo Conrado, Rakesh Gangwal, Thomas Gilligan, David Hess, Elaine Mendoza, Christopher Reynolds, and Jill Soltau.