The airline has been under pressure from the hedge fund Elliott to replace its top management and make other changes to increase its profits.
Southwest Airlines on Tuesday announced an overhaul of its board of directors, including the planned departure of its executive chairman, Gary Kelly, after a meeting with a hedge fund that has called for sweeping changes at the company.
The board announced the changes while expressing unanimous support for the airline’s chief executive, Bob Jordan, who with Mr. Kelly had been the target of sharp criticism from the hedge fund, Elliott Investment Management. In a statement, the airline said its board was “confident that there is no better leader” for Southwest than Mr. Jordan, who became chief executive in February 2022.
“Bob has a proven track record over decades and, most importantly, he has what it takes to lead Southwest through a significant transformation and usher in a new era of profitable growth, innovation and industry leadership,” Mr. Kelly, who was chief executive before Mr. Jordan took over, said in a letter to shareholders.
Southwest presented its plan to Elliott at a meeting in New York on Monday. It was not clear whether the overhaul would satisfy Elliott, which has a roughly 11 percent stake in the company. Elliott has called for both Mr. Kelly and Mr. Jordan to step down and has sought to replace most of the directors on the company’s board.
Shares of Southwest were down nearly 3 percent in morning trading on Tuesday.
“We are pleased that the board is beginning to recognize the degree of change that will be required at Southwest, and we hope to engage with the remaining directors to align on the further necessary changes,” Elliott said in a statement. “The need for thoughtful, deliberate change at Southwest remains urgent, and we believe the highly qualified nominees we have put forward are the right people to steady the board and chart a new course for the airline.”
Mr. Kelly, who was the airline’s chief executive for nearly two decades before Mr. Jordan took over, said that he planned to retire after the airline’s annual meeting in the spring. Six other mostly longstanding board members plan to step down after a meeting in November.
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Source: Elections - nytimes.com
