Southwest Airlines announced a revamp of its board, with six directors set to leave and plans to appoint four new independent directors as a response to pressure from hedge fund Elliott Investment Management.
Despite Elliott’s push for CEO Robert Jordan’s replacement, Southwest decided to keep Jordan, while announcing the retirement of Chairman Gary Kelly after the annual meeting next year.
The big picture: Southwest’s changes include dropping open seating, introducing premium seats for sale, and launching red-eye flights to adapt to evolving market demands.
- Shares of Southwest Airlines Co. fell 4% following the announcement of the board shake-up.
- Elliott Investment Management, led by billionaire Paul Singer, holds a 10% stake in Southwest and has been advocating for changes to bolster the airline’s financial performance and stock price.
- Elliott’s pressure on Southwest included a request to replace both the CEO and Chairman, referencing the airline’s lagging stock price and the need for leadership changes.
What they’re saying: Kelly wrote a letter to shareholders saying Southwest’s recovery from the pandemic has been challenging due to higher costs.
- “Now is the time for change,” Kelly wrote. “It’s time to shake things up, not just stir them a bit.”
