Southwest Airlines revealed significant changes to its board of directors on Tuesday, including the upcoming departure of executive chairman Gary Kelly, following pressure from Elliott Investment Management, the activist hedge fund pushing for sweeping reforms at the company.
Despite the board changes, Southwest’s directors unanimously expressed their support for CEO Bob Jordan, who, along with Kelly, has been a target of Elliott’s sharp criticism. In a statement, the airline reaffirmed its confidence in Jordan, who took over as CEO in February 2022.
“There is no better leader for Southwest than Bob,” the statement read. Kelly, who served as CEO before Jordan’s appointment, added in a letter to shareholders, “Bob has a proven track record over decades and is uniquely positioned to lead Southwest through a significant transformation and a new era of profitable growth and innovation.”
The announcement followed a meeting between Southwest and Elliott in New York on Monday, during which the airline presented its overhaul plan. It remains unclear if the proposed changes will satisfy Elliott, which holds an 11% stake in the company. The hedge fund had previously called for both Kelly and Jordan to step down, alongside a near-total replacement of the board.
Southwest’s shares dropped nearly 3% following the announcement.
Elliott acknowledged the changes but maintained that more reforms were necessary. “We are pleased that the board is starting to acknowledge the need for significant changes at Southwest, but we still believe additional steps are crucial,” the hedge fund said in a statement. Elliott also reiterated its belief in the strength of the new board candidates it had nominated, describing them as “highly qualified” individuals capable of guiding the airline towards a more successful future.
Kelly, who led the airline for nearly two decades, confirmed his retirement after the company’s annual meeting in the spring of 2025. Six other long-serving board members are expected to step down after a meeting in November. Once the overhaul is complete, 75% of the 15-member board will have served for three years or less. The airline plans to appoint four new board members soon, with Elliott’s recommendations being considered. After Kelly’s departure, the board will consist of 12 members.
Elliott had been critical of Kelly and Jordan’s leadership, pointing to Southwest’s declining share price in recent years. The hedge fund called for greater board oversight and last month nominated 10 new board members, many of whom are former aviation industry executives.
Kelly also announced on Tuesday that the board would establish a new committee to oversee corporate strategy and financial performance. Southwest plans to provide further details during an investor presentation in Dallas later this month.
