An activist investor with a new $1.9 billion stake in Southwest is calling for big changes at the airline

An activist investor with a new .9 billion stake in Southwest is calling for big changes at the airline
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Southwest’s stock price has struggled since the pandemic started. Elliott Investment Management says its proposed changes could push shares 77% higher.

  • Elliott Management has called for changes at Southwest to fix what it says is poor performance.
  • Southwest’s share price has plummeted over 50% in three years, to below March 2020 levels.
  • The hedge fund’s “Stronger Southwest” plan suggests new leadership and a review of the business model.

Southwest Airlines touts itself as the “LUV” carrier, with its two free checked bags and comedic flight crews — a strategy that revolutionized low-cost air travel and earned the carrier a 47-year profitability streak from 1973 to 2019.

However, Elliott Investment Management said Monday that the airline’s decades-old strategies weren’t working in modern times, and it’s calling for a management and board-of-directors overhaul as part of a plan it’s calling “Stronger Southwest.”

“Poor execution and leadership’s stubborn unwillingness to evolve the Company’s strategy have led to deeply disappointing results for shareholders, employees and customers alike,” the activist investment firm said in a letter announcing a new $1.9 billion stake, which makes it among the company’s largest shareholders.

Elliott said Southwest leadership had a “rigid commitment” to the model it dreamed up decades ago, blaming that for today’s shortcomings. It cited a major meltdown in December 2022 that affected millions of passengers, which stemmed from antiquated crew-scheduling systems and resulted in snowballing cancellations across the country.

“No senior executives were terminated for their role in the meltdown,” it said. Elliott would also like to see new, outside talent on the board of directors.

Southwest’s stock price has fallen more than 50% in three years, Elliot said, underperforming some competitors and falling below 2020 levels.

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