Elliott seeks 10 of the 15 board seats at Southwest in bid to strengthen the airline's performance
Hedge fund Elliott Management is escalating its fight against the management of Southwest Airlines
DALLAS — Elliott Investment Management is launching a proxy fight with Southwest Airlines and plans to nominate 10 candidates for the 15-member board of an the airline where performance has lagged behind competitors.
The hedge fund said late Tuesday CQ that naming a slate of director candidates marks “a key step toward implementing the urgent changes needed at Southwest.”
Southwest said Wednesday that it has repeatedly sought to engage Elliott to address its concerns, but those attempts have been rebuffed.
“After Elliott recently agreed to a meeting with Southwest Airlines in early September to discuss a collaborative resolution, including continuing significant Board refreshment and other governance enhancements, Elliott unilaterally decided instead to publicly announce its intention to replace a majority of Southwest Airlines’ Board,” Southwest said in a prepared statement.
Shares of Southwest Airlines Co. rose more than 1% before the opening bell Wednesday.
According to a regulatory filing Tuesday, Elliott has accumulated roughly an 8% stake in Southwest. The airline's shares have dropped 12% this year as the S&P 500 has gained 14%. It has not been a stellar year for airlines, but shares of Southwest have suffered more than both Delta Air Lines and United Airlines.
The company trailed far behind Delta, United and American Airlines in second-quarter operating margin, and analysts expect Southwest to lose money in the third quarter.
“The urgency of change is underscored by the substantial continued deterioration in Southwest’s performance” since Elliott announced its proposed overhaul of Southwest, the firm said.
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