Over the past month, Southwest Airlines has experienced a dramatic boardroom conflict reminiscent of the TV series “Succession.” Elliott Investment Management has been pushing for significant changes in leadership, citing poor performance and a lack of willingness to evolve. They’ve gained enough shares to call a special shareholder meeting, potentially leading to a vote on the leadership of CEO Bob Jordan and board chairman Gary Kelly.
Southwest insists its current leadership is effective, but responded to the pressure by significantly altering its board. CEO Bob Jordan remains, while Gary Kelly opted for early retirement. Six board members, including prominent figures like David Biegler and Senator Roy Blunt, are set to depart.
Southwest also announced plans to add four new board members soon and is considering candidates recommended by Elliott, including former executives from Ryanair and Virgin America. The company has hired an independent firm to find new candidates who can complement the existing team and help steer the company forward.
Amidst these changes, the airline has also modified its seating policy to charge for seat selection, suggesting further strategy shifts may be forthcoming. This decision follows criticisms from Elliott about the airline’s financial strategies and performance.
Southwest’s stock has declined, dropping 4.31% to $28.35 on the morning of September 10. Elliott maintains that immediate and thoughtful change is necessary to improve the airline’s trajectory and stabilize its operations.
