Hedge fund mogul Paul Singer’s Elliott Investment Management has officially accumulated enough shares of Southwest Airlines to start pushing for a leadership shakeup inside the struggling airline. Elliott and Southwest’s leadership team have scheduled a “special meeting” on Sept. 9, Reuters reported this week. A “special meeting” allows shareholders to vote on issues typically reserved for annual meetings, such as electing board directors and making key leadership changes. The New York-based activist fund, which now owns 10 percent of Southwest, has called for CEO Robert Jordan and executive chairman Gary Kelly to step down and wanted to nominate 10 of the 15 board seats available.
Jordan, who has served as Southwest’s chief executive since 2022, has told staff he plans to fight off Elliott and has refused to resign. “Don’t be fooled—this is a battle for the heart of our company and our future—your future,” Jordan wrote in a memo to staff in early August. Jordan joined Southwest in 1988 as a programmer, shortly after graduating from Texas A&M, and rose the ranks to CEO in 2022, succeeding Kelly, who had been CEO since 2004. Kelly joined Southwest in 1986 as a controller. He was appointed the airline’s board chairman in 2008.
“The executive chairman and CEO, who have spent a cumulative 74 years at Southwest, have presided over a period of stunning underperformance at the company. Further, they have demonstrated that they are not up to the task of modernizing Southwest,” Elliott wrote in a June 10 presentation to Southwest’s board.
Southwest lost half of its market value in the three-year period ended June 2024, just before Elliott revealed its $1.9 billion stake in the company. Elliott has blamed Southwest’s falling stock price on its leadership’s “rigid commitment to a decades-old approach,” particularly its inability to keep up with new technology. During the week of Christmas in 2022, over 15,000 Southwest Airlines flights were delayed, and 2,300 were canceled, ruining the holidays for countless customers. The airline’s chief operating officer, Andrew Watterson, explained the incident was due to outdated scheduling software. Southwest leadership likely had long been aware of the issue but failed to act, as Captain Casey Murray, president of the Southwest Airlines Pilots Association, told CNN in the aftermath of the crisis. “We’ve been having these issues for the past 20 months,” he said.
In early June, Elliott disclosed a series of new investments worth a total of $400 billion in companies, including Softbank Group, Texas Instruments, Johnson Controls, Sensata Technologies, Sumitomo, and Anglo American. In July, Reuters reported that the hedge fund had also recently accumulated a sizable stake in Starbucks and played an instrumental role in the ousting of its CEO last month.
