Elliott demands extraordinary shareholders' meeting at Southwest Airlines

The activist investor Elliott Investment Management is further stirring the mood at Southwest Airlines: For the first time since 2017, Elliott plans to engage in a U.S. proxy battle by requesting a special shareholders' meeting. The goal is to appoint eight new candidates to the board, thereby replacing the same number of current directors. Southwest Airlines had already announced in September that six board members, including Chairman Gary Kelly, would step down. The airline reduced the size of the board to 12 seats, creating three vacant positions. Elliott, which now holds an 11% stake in Southwest, has long been pushing for changes in leadership and has targeted CEO Bob Jordan. Originally, Elliott intended to replace 10 director positions, but considering the reduced board size, the number of candidates was limited to eight. In response to Elliott's efforts, Southwest introduced a stock buyback program in September and announced a departure from its "Open Seating" policy. These measures were presented as part of an investor presentation after Elliott disclosed a $2 billion stake back in June. Southwest also countered with a "poison pill" strategy in July to fend off Elliott's influence, describing the investor's involvement as mere "tactics and machinations." Despite the tensions, Elliott is trying to avoid a prolonged conflict. In a letter sent to Southwest shareholders in August, Elliott emphasized the airline's historic value and the need for excellent board governance. These strategic moves come with a reason: Over the past three years, Southwest Airlines' stock price has fallen by around 40%, although values have rebounded by 20% in the last twelve months—still lagging behind competitors like Delta Air Lines and United Airlines Holdings.