Home » World » Extraordinary General Meeting: Southwest investor wants to replace airline management

Extraordinary General Meeting: Southwest investor wants to replace airline management

Passengers wearing face masks sit in a Southwest Airlines plane after landing. © dpa / Julio Cortez { “@context”: ” “@type”: “ImageObject”, “url”: ” “copyrightHolder”: {“@type”: “Person”, “name”: “© dpa/ Julio Cortez”} }

Elliott Investment Management has made a major purchase in Southwest Airlines. The hedge fund, which is considered activist, is now using its power to call an extraordinary general meeting. The goal: to replace the management of the struggling budget airline.

dh, Reuters September 25, 2024, 5:25 p.m.

Activist investor Elliott Investment Management has announced that it will call an extraordinary general meeting at Southwest Airlines next week. The aim is to replace the airline’s management.

Elliott owns more than 10 percent of Southwest’s stock, enough to call an extraordinary general meeting. Southwest’s last annual general meeting was held in May. The next regular meeting is not scheduled until next spring.

In a response, the US low-cost airline again ruled out a change in leadership and stated that CEO Bob Jordan was the “right leader” to successfully implement the strategy to improve financial performance and increase company value.

Under pressure from Elliot, the airline had already announced that six directors would resign in November and that CEO Gary Kelly would retire next year. Elliot could then nominate at least three people to succeed him on the board. CEO Jordan, however, wants to remain loyal to the airline.

“Any change in leadership in the midst of such a significant restructuring would be detrimental to all shareholders,” Southwest said. It would seek a compromise with Elliott, “accepting a single shareholder’s demand for absolute control of the company, but not a compromise,” it said.

Extraordinary General Meeting: Southwest investor wants to replace airline management

Read also: Southwest investor continues to push for leadership change

Major financial difficulties

The Dallas-based airline has struggled to regain its footing following the pandemic, due in part to delays in Boeing’s aircraft deliveries and industry-wide overcapacity in the domestic market.

Southwest’s operating margin fell to 0.2 percent in the first half of this year, compared to more than 13 percent in 2019. In comparison, Delta Air Lines reported an operating margin of 9.5 percent in the first six months, while United Airlines posted seven percent. Southwest’s shares have lost about 43 percent over the past three years, while Delta’s shares have gained nine percent.

Low-cost airline pioneer Southwest introduces premium class, © Southwest Airlines,

Read also: Low-cost airline pioneer Southwest introduces premium class

To turn things around, Southwest plans to offer fixed seats and a premium class with more legroom to allow it to charge seat reservation fees and attract premium travelers. The company also plans to make changes to its route network. The airline plans to announce further details of its turnaround plan later this week.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.