Activist shareholder Elliott Investment Management is calling for Southwest Airlines to hold a proxy vote on Dec. 10. The vote would ask shareholders to support Elliott's slate of eight board members and ask Southwest investors to remove eight current board members, including chairman Gary Kelly, who otherwise plans to step down in May.
If the effort is successful, it would leave just four existing Southwest board members in place, plus CEO Bob Jordan, whose removal is a primary goal of Elliott's.
"Today, after exhaustive attempts to persuade Southwest to implement the necessary governance changes, we are formally calling a special meeting to give shareholders the opportunity to elect a completely independent, best-in-class slate of director nominees. Absent a thorough reconstitution of its board, the story of Southwest will remain one of empty promises and unfulfilled potential," Elliott partner John Pike and portfolio manager Bobby Xu said in a prepared statement Monday. Elliott owns an 11% stake in Southwest.
Travel Weekly has requested comment from Southwest.
At its Investor Day on Sept. 26, Southwest detailed plans that its leadership team says will reinvigorate the airline. They estimate the new measures will produce $4 billion in incremental revenue and an operating margin of 10% by 2027.
Key initiatives include the introduction of extra-legroom seats and moving to assigned seating in the first half of 2026. Southwest also plans to enter into airline partnerships, starting with Icelandair next year, and to relaunch its vacation-package brand in mid-2025, which will be run in-house.
In addition, the airline will take a variety of measures to improve its cost metrics, including increased fleet utilization through the launch of red-eye flights next February and a series of steps geared toward reducing aircraft turn times.
The board slate put forward by Elliott includes former Virgin America CEO David Cush, former Marriott International group president for the Americas Dave Grissen, former Air Canada CEO Robert Milton and former WestJet CEO Gregg Saretsky.
The total slate of eight is two fewer than Elliott put forward in August. However, since that time Southwest has announced plans to pare down its board from 15 in August to 12 by next May.
In an unsuccessful attempt to placate Elliott, Southwest announced that six directors will step down next month. The board has also added two members since Elliott acquired its stake in the airline in June, most recently former Spirit CEO Bob Fornaro in late September.