Elliott Investment Management has launched a proxy fight with Southwest Airlines and intends to nominate 10 candidates—former airline industry leaders among them—for Southwest's 15-member board. The hedge fund stated this effort is a "key step toward implementing the urgent changes needed at Southwest." Southwest, headquartered in Dallas, has not commented on Elliott's intentions, which were revealed in a regulatory filing on Tuesday.
Elliott disclosed an 8% stake in Southwest on Tuesday. The airlines shares have plummeted 12% this year despite a 14% rise in the S&P 500. Analysts predict continued poor performance, with an expectation of losses in the third quarter. Elliott emphasized the need for change due to "substantial continued deterioration in Southwest's performance." The fund has previously demanded the ousting of CEO Robert Jordan and Chairman Gary Kelly.
Southwest announced plans to boost revenue by switching to assigned seating and offering extra legroom at higher fares. Elliott's proposed board slate includes the former CEO of Air Canada, former senior execs with JetBlue and Ryanair, and a former US Transportation Department official. The hedge fund has a history of advocating for changes in underperforming companies—it had pushed for a change in leadership at Starbucks for the past two months. The coffee giant named a new CEO on Tuesday.
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