A Southwest Airlines Boeing 737 departs from Los Angeles International Airport to Las Vegas on September 19, 2024 in Los Angeles, California.
Kevin Carter Getty Images
Elliott management said Tuesday it will call a special meeting Southwest Airlines “As soon as next week,” not long after the company made a sweeping announcement that it hoped would prevent a proxy war.
The push comes days before the airline’s investor meeting, where it is expected to unveil improvements and operational changes. Elliott is seeking to oust CEO Bob Jordan and Executive Chairman Gary Kelly, the latter of whom has committed to resign in 2025. The activist has proposed 10 directors that include airline executives and former regulators or government officials.
“We believe that competent new leadership, working through a deliberate and thoughtful process, must chart the course for Southwest,” Elliott partner John Pike and portfolio manager Bobby Xu said in a letter to shareholders.
“We don’t supports the Company’s current course, which is described in a reckless manner by a group of executives in self-preservation mode,” Pike and Xu wrote.
Southwest’s shareholder meeting is normally scheduled for May, but by calling a special meeting Elliott wants to elect new directors sooner than that. It took several months for both sides to get shareholder support, and a settlement was certainly possible during that time.
Elliott said Southwest advisors were maneuvering to limit the number of shareholders eligible to vote, through something known as “false record date.”
Southwest Airlines in July showed a major change to the business model more than 50 years old: It will soon ditch open seating for assigned seats, offer seats with more legroom that command higher rates and start operating red-eye flights. Last week, COO Andrew Watterson warned staff to prepare for “difficult decisions” in a bid to restore profitability as the airline faces rising costs and changing travel patterns.
The company is not planning any furloughs, but could reduce its presence in certain cities and give workers the chance to move to other bases, according to people familiar with the matter.
Southwest will release a regular schedule update on Wednesday that will show flights through early June. Earlier this month, Kelly, who served as CEO of Southwest before handing the reins to Jordan in early 2022, said he would step down after the carrier’s shareholder meeting next spring.
The Fraternal Association of Aircraft Mechanics, which represents Southwest mechanics and met with Elliott, said last week that the activist investor made it “clear that the vision of Southwest’s turnaround is one where Robert Jordan does not remain as CEO, and that Elliott can assert enough Board influence. , Other top executives will also, most likely, be replaced.”
“The need for change is urgent, and our request for a special meeting may come next week,” Pike and Xu said.
Southwest did not immediately return a request for comment.
