Shares of Southwest Airlines (LUV) climbed on Tuesday following the announcement that hedge fund Elliott Investment Management has acquired a significant stake in the company, positioning itself to initiate a special meeting aimed at overhauling the airline’s leadership.
In a regulatory filing, Elliott revealed it now owns over 61 million shares of Southwest, surpassing the 10% threshold required to request a special meeting. This development follows the hedge fund’s August 13 declaration of its intention to nominate 10 new board members in a bid to boost Southwest’s stock performance. At that time, Elliott disclosed it held approximately 11% of the airline’s shares.
Elliott has criticized the current board for what it describes as “poor returns for shareholders” and a lack of accountability for Southwest’s “unacceptable performance.” The hedge fund is pushing for a board that offers “relevant expertise, fresh thinking, and accountability,” emphasizing the need for “urgent changes” at the airline.
In a subsequent open letter to shareholders, Elliott specifically targeted Southwest’s Chief Executive Officer Bob Jordan and former CEO and current Executive Chair Gary Kelly, accusing them of failing to adequately address the company’s challenges. The letter also indicated that Elliott plans to meet with Southwest representatives on September 9 in an effort to garner support from board members who share its views.
In response to Elliott’s actions, Southwest implemented a one-year “poison pill” strategy earlier this summer, designed to deter hostile takeovers. The airline has also expressed frustration that Elliott did not initially engage with management to discuss potential constructive changes.
As of Tuesday afternoon, Southwest Airlines shares had risen 1.3%, reaching $29.29, marking a modest gain in a year where the stock had remained mostly flat.
