Southwest Airlines (WN, Dallas Love Field) will meet with activist shareholder Elliott Investment Management on September 9, 2024, to discuss changes at the low-cost carrier, according to Reuters.
Elliott has accrued an 11% stake in Southwest and is agitating for change, including ousting CEO Bob Jordan and chairman Gary Kelly and overhauling the board, to “drive long-term value for all shareholders.” Southwest Airlines has confirmed the September meeting, issuing a statement saying it welcomed "the opportunity to discuss ideas that would drive sustained shareholder value as we work to reach a collaborative resolution."
Coinciding with the agreement to meet, Elliott has sent a five-page letter to Southwest's shareholders setting out its case for removing Southwest's leadership. "Southwest’s board still seems unable to grasp how profound the company’s credibility deficit with investors has become," the August 26 letter reads. "Southwest's investors should not trust a board-refreshment process led by its incumbent leadership."
The letter, signed by Elliott partner Bob Pike and portfolio manager Bobby Xu, said "shareholders simply do not trust this leadership team to 'evolve the business,' when, in the words that the company itself used in June to explain its eighth guidance reduction in the last 18 months, it is struggling with 'complexities in adapting its revenue management to current booking patterns,' one of any airline's most basic responsibilities. Simply put, this is an admission of business and vision failure."
Earlier this month, Elliott filed a proxy statement with the US Securities and Exchange Commission, proposing ten new board members that it said would bring "relevant expertise, fresh thinking, and accountability" to the carrier.
Southwest Airlines flies to 112 airports in 12 countries with a fleet of 820 aircraft, including 376 B737-700s, 239 B737-8s, and 205 B737-800s. In July, it warned of declining third-quarter unit revenue and rising costs, with the airline flagging higher expenses until the end of 2024. “We are taking urgent and deliberate steps to mitigate near-term revenue challenges and implement longer-term transformational initiatives that are designed to drive meaningful top and bottom-line growth,” Jordan said at the time.
Elliott says it hopes there are "individuals on the board willing to look past the personal interests of Mr Jordan and Mr Kelly in favour of what is best for Southwest and its many other constituents" at the September meeting.
