A Southwest Airlines Boeing 737-7Q8 takes off from Ronald Reagan Washington National Airport in Arlington Virginia on August 13, 2024.
Daniel Slim | Afp | Getty Images
Activist investor Elliott Management will launch a proxy fight at Southwest Airlines, and intends to nominate as many as 10 directors to the company’s 15-person board, the activist said Tuesday evening.
Elliott plans to call a special meeting, rather than waiting for the company’s annual shareholder meeting. Southwest’s last shareholder meeting was held in May.
Elliott’s ten nominees are:
- Michael Cawley, former Ryanair deputy CEO
- David Cush, former Virgin America CEO
- Sarah Feinberg, a former federal transportation regulator
- Josh Gotbaum, a former Lazard banker and White House appointee
- Dave Grissen, former Marriott International group president
- Nancy Killefer, former McKinsey senior partner and Treasury Department administrator
- Robert Milton, former CEO of Air Canada and former United Airlines chair
- Gregg Saretsky, former WestJet CEO
- Eash Sundaram, former JetBlue executive vice president
- Patty Watson, NCR Atleos chief technology officer
The activist has already amassed an economic interest of roughly 11%, although only 7% is in common stock. Elliott needs to own at least 10% of the company in order to call a special meeting, under Southwest’s bylaws, a threshold that it will likely cross soon.
“The strong qualifications of these Candidates stand in contrast to those of the current Board, which prior to Elliott’s June 10 letter lacked a single independent director with airline experience,” Elliott said in a statement.
Elliott disclosed its Southwest investment in June, writing to the company’s board to say that it believed that CEO Bob Jordan and chairman Gary Kelly were responsible for a precipitous decline in the company’s fortunes and that Southwest should move to replace them, as well as begin a business review.
Southwest rebuffed those requests, and CEO Jordan since told CNBC that Elliott’s engagement with the company had not been meaningful. The activist had already intimated that it would seek to call for a special meeting in its second letter to Southwest’s board.
The 10-person slate will not include any Elliott employees, the person said. The news comes the same day that another Elliott-targeted company, Starbucks, announced it would appoint Chipotle CEO Brian Niccol as the coffee chain’s new chief.
Southwest last month announced the biggest changes to its business model in its more than 50 years of flying, with the end of its open seating model and premium seating that will come with extra legroom.
Southwest had been studying such changes for years, but an oversupplied U.S. market has driven down fares, forcing the carrier and its rivals to adopt new business models to drum up revenue. Budget carrier Spirit Airlines, for example, recently said it would start selling a sort of business class with its bigger seats at the front of the cabin that will come with complimentary Wi-Fi, snacks, drinks and checked luggage.
The airline’s executives will discuss its strategy in more detail during an investor day next month.
