Skift Take
In a letter to shareholders, Elliott said it still doesnât support Southwestâs current course and would continue to push for new leadership.
Elliott Investment Management said Tuesday it would call for a special meeting at Southwest Airlines as soon as next week.
The hedge fundâs push for a special meeting comes just two days before the airlineâs investor day, where itâs expected to reveal more changes to its business model. Seven Southwest board members â including chairman Gary Kelly â announced two weeks ago that they would step down in response to Elliottâs demands.Â
Elliott could use a special meeting to elect new members to Southwestâs board â it already proposed 10 possible candidates.
âWe believe that competent new leaders, working through a deliberate and thoughtful process, should chart the course forward for Southwest,â wrote Elliott partner John Pike and portfolio manager Bobby Xu in a letter to shareholders. âWe do not support the Companyâs current course, which is being charted in a haphazard manner by a group of executives in full self-preservation mode.â
Southwest has seen a significant dip in profits this past year as it deals with aircraft delivery delays and changing consumer preferences. However, the carrier has made some changes. In July, it announced that it would roll out premium seating and introduce red-eye flights.
The airlineâs flights also started appearing on Google Flights and Kayak as part of an attempt to broaden its customer base.
Southwest did not immediately respond to a request for comment.
While Southwestâs board said it supported CEO Bob Jordan, Elliott is still pushing for him to step down.
There have also been recent reports that Southwest chief operating officer Andrew Watterson told staff to be prepared for âmore difficult decisionsâ as the carrier seeks to restore its profitability.
According to CNBC, Southwest could reduce its presence in certain cities and have staff transfer to other cities. The carrier is not considering furloughs, according to the report.
Airlines Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.
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