Activist hedge fund firm Elliott Management is intensifying its challenge to the management of Southwest Airlines by launching a proxy battle aimed at securing 10 of the 15 board seats at the airline, according to a report by ABC News. In a statement released late Tuesday, Elliott described its slate of director nominees as a crucial step towards implementing necessary changes at Southwest. The hedge fund believes these changes are urgent given the airline’s underperformance compared to its rivals. Southwest responded on Wednesday, noting that it has made multiple efforts to engage with Elliott to address the firm's concerns, but these attempts have been unsuccessful. “Despite agreeing to meet with us in early September to discuss potential resolutions, including board refreshment and governance improvements, Elliott chose instead to publicly announce their intention to replace a majority of our board,” said a Southwest spokesperson. The airline’s shares have fallen 12% this year, while the S&P 500 has risen 14%. Southwest’s stock performance has lagged behind competitors such as Delta Air Lines and United Airlines. Elliott, meanwhile, has criticised the current leadership, including CEO Robert Jordan and Chairman Gary Kelly, for failing to keep pace with industry changes. The hedge fund's proposed board slate includes former CEOs of Air Canada, WestJet and Virgin America, as well as senior executives from JetBlue, Ryanair and a former US Transportation Department official.
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