A Southwest Airlines Boeing 737 departs from Los Angeles International Airport bound for Las Vegas on September 19, 2024 in Los Angeles, California.
Kevin Carter | Getty Images
Elliott Management said Tuesday that it will call a special meeting at Southwest Airlines “as early as next week,” shortly after the company proposed a sweeping board overhaul in hopes of averting a proxy fight.
The move comes days before the airline’s investor meeting, where it is expected to announce improvements and changes to its operations. Elliott is seeking to remove CEO Bob Jordan and executive chairman Gary Kelly, the latter of whom has pledged to step down by 2025. The activist has drawn up a list of ten directors that includes airline executives and former regulators or government officials.
“We believe that capable new leaders, working through a careful and thoughtful process, will chart the next path for Southwest,” Elliott partner John Pike and portfolio manager Bobby Xu said in a letter to shareholders.
“We do not “supports the Company’s current direction, which is being haphazardly mapped out by a group of executives in a purely self-protective mode,” Pike and Xu wrote.
Southwest’s shareholder meeting is typically scheduled for May, but by calling a special meeting, Elliott is looking to elect new directors much sooner. It would take both sides several months to rally shareholder support, and a deal could always be reached in the interim.
Elliott said Southwest’s advisers are looking to limit the number of shareholders eligible to vote through a so-called “false record date.”
Southwest Airlines launches in July big changes with its more than 50-year-old business model: The airline will soon eliminate open seating for assigned seating, offer seats with more legroom at higher fares, and begin operating night flights. Last week, CEO Andrew Watterson warned employees to prepare for more “difficult decisions“in an effort to restore profitability as the airline faces rising costs and changing travel patterns.
The company has no plans to furlough employees but may cut its presence in certain cities and offer employees the opportunity to transfer to other bases, according to a person familiar with the matter.
Southwest will release a regular schedule update on Wednesday that will show the airline’s flights through early June. Earlier this month, executive chairman and former CEO Gary Kelly said he would step down after the company’s shareholders meeting next year.
The Brotherhood of Aircraft Mechanics, which represents Southwest mechanics and has met with Elliott, said last week that the activist investor “made clear that their vision for Southwest’s turnaround is that Robert Jordan will not remain CEO, and that if Elliott can assert enough influence over the board, it is likely that other senior executives will be replaced as well.”
“The need for change is urgent and our request for a special meeting is likely to come as early as next week,” Pike and Xu said.
Southwest did not immediately respond to a request for comment.
