A Southwest Airways Boeing 737 departs Los Angeles Worldwide Airport en path to Las Vegas on September 19, 2024 in Los Angeles, California.
Kevin Carter | Getty Photos
Elliott Administration stated Tuesday it should name a particular assembly at Southwest Airways “as quickly as subsequent week,” shortly after the corporate put ahead a sweeping board shake-up that it hoped may stave off a proxy struggle.
The push comes days earlier than the airline’s investor assembly, the place it’s anticipated to unveil enhancements and working modifications. Elliott is searching for to oust CEO Bob Jordan and Government Chairman Gary Kelly, the latter of whom has already dedicated to stepping down in 2025. The activist has put ahead a 10-director slate comprised of airline executives and former regulators or authorities officers.
“We imagine that competent new leaders, working via a deliberate and considerate course of, ought to chart the course ahead for Southwest,” Elliott companion John Pike and portfolio supervisor Bobby Xu stated in a letter to shareholders.
“We do not help the Firm’s present course, which is being charted in a haphazard method by a gaggle of executives in full self-preservation mode,” Pike and Xu wrote.
Southwest’s shareholder assembly is often scheduled for Could, however by calling for a particular assembly Elliott is trying to elect new administrators a lot earlier than that. It takes just a few months for each side to solicit shareholder help, and a settlement is at all times doable within the interim.
Elliott stated Southwest’s advisors had been maneuvering to restrict the variety of shareholders eligible to vote, through one thing often called a “false file date.”
Southwest Airways in July unveiled main modifications to its greater than 50-year-old enterprise mannequin: It’ll quickly ditch open seating for assigned seats, supply seats with extra legroom that command increased fares and begin working red-eye flights. Final week, COO Andrew Watterson warned employees to brace for extra “tough choices” in its push to revive earnings because the airline faces rising prices and shifting journey patterns.
The corporate is not planning to furlough staff but it surely might minimize its presence in sure cities and provides staff the prospect to switch to different bases, in keeping with an individual conversant in the matter.
Southwest will launch a routine schedule replace on Wednesday that may present its flights via early June. Earlier this month, Kelly, who served as Southwest’s CEO earlier than handing the reins to Jordan in early 2022, stated he would step down after the provider’s shareholder assembly subsequent spring.
The Plane Mechanics Fraternal Affiliation, which represents Southwest’s mechanics and met with Elliott, stated final week the activist investor made “clear that its imaginative and prescient of a Southwest turnaround is one the place Robert Jordan doesn’t stay as CEO, and if Elliott can assert sufficient Board affect, different prime executives would additionally, more than likely, get replaced.”
“The necessity for change is pressing, and our request for a particular assembly might come as quickly as subsequent week,” Pike and Xu stated.
Southwest didn’t instantly return a request for remark.
