Activist investment firm Elliott Investment Management now owns 10% of Southwest Airlines’ common stock, surpassing the threshold required to call a special meeting at the airline, according to a report by Reuters citing an unnamed source familiar with the situation.
The development comes just days before a scheduled meeting on 9 September between the two parties to address the issues that have led to Southwest’s stock losing nearly half its value over the past three years.
Elliott, one of the most influential activist investors globally with $70bn in assets under management, has been pushing for significant changes at Southwest, including the removal of CEO Robert Jordan and Executive Chairman Gary Kelly. The hedge fund has also proposed nominating 10 new directors to the airline’s 15-member board.
While Elliott previously held an 11% economic stake in Southwest through derivatives, the hedge fund has now converted a portion of those holdings into common shares, crossing the 10% ownership threshold required to call a special meeting. Despite this conversion, Elliott’s overall economic stake in the airline remains unchanged.
Southwest representatives were not immediately available for comment on the development.
Jordan, who has served as CEO since 2022, has stated he has no plans to resign and has indicated to employees that he and the leadership team are prepared to oppose Elliott’s demands. However, Elliott has signalled to other shareholders that it is prepared to take further action, including calling a special meeting – which would allow shareholders to vote on urgent matters outside of the annual meeting – if the company does not engage in discussions about leadership changes.
If Elliott were to call one, it would mark a significant escalation in its ongoing battle with Southwest since its interest in the airline became public in June.
In response to Elliott’s pressure, Southwest has implemented several measures to try to bolster its stock price and reputation, including adding seats with more legroom, introducing assigned seating, and appointing a new board member in July. The airline has also adopted a shareholder rights plan, which limits any investor from acquiring more than 12.5% of its stock, in an attempt to defend against further activist pressure.
Despite these efforts, Elliott has criticised the airline’s actions as too little, too late. Southwest’s stock, which had fallen 50% over the three years leading up to 7 June when Elliott’s investment became public, closed at $28.92 on Friday. The company’s market value has plummeted to $17bn from $41bn in 2017, based on Elliott’s analysis.
