Good morning from Skift. It’s Friday, July 26, and here’s what you need to know about the business of travel today.
13.07.2024 - 13:08 / skift.com / Elliott Management / Elliott Investment Management / Meghna Maharishi / Indigo Airlines
Activist investor Elliott Investment Management fired back at Southwest Airlines Monday for adopting a “poison pill” and appointing a new director to its board.
“In light of these actions, we have become increasingly concerned by the ‘self-help’ half-measures that the Board appears to be contemplating and adopting, none of which will do anything to allay the lost credibility of Southwest’s management,” wrote Elliott partner John Pike and portfolio manager Bobby Xu in a letter to the airline’s board.
The hedge fund said Southwest’s board is “profoundly out of touch” with shareholder sentiment and was pushing for the airline to appoint a new CEO, along with adding more board members with relevant experience.
Elliott took a $1.9 billion stake in Southwest and has since advocated for the airline’s CEO and chairman to step down. The carrier has underperformed in 2024, with issues ranging from Boeing delivery delays, sustained demand for premium travel and high labor costs eating into its profits. Elliott believes new leadership would restore Southwest’s profitability.
Southwest said Elliott has been trying to acquire an even bigger stake in the company through filings made with antitrust authorities.
To prevent Elliott from acquiring a controlling stake, Southwest recently adopted a “poison pill.” The plan goes into effect if an investor acquires at least a 12.5% stake in the company, giving other shareholders the opportunity to buy a Southwest share for every share they own at a 50% discount. A “poison pill” would dilute Elliott’s voting power.
Earlier on Monday, Southwest also announced that it appointed IndiGo co-founder and longtime airline executive Rakesh Gangwal to its board of directors. Elliott described Gangwal’s appointment as an “attempt to entrench itself and the current management team.”
Southwest said it was open to “constructive conversations” with Elliott, but claimed the hedge fund wouldn’t engage in serious discussions without a CEO ouster.
“Despite Southwest Airlines’ good faith efforts to meet with Elliott to better understand their views, Elliott has focused on personal attacks on our Leadership Team and Board, conditioning any serious discussions on an immediate CEO change,” Southwest said in a statement.
The hedge fund claimed it spoke to other shareholders who believed the airline needed leadership changes to turn around its recent underperformance. Only one shareholder — asset management firm Artisan Partners — has come out publicly in favor of Elliott’s campaign so far.
Elliott also alleged that multiple Southwest employees had reached out to the hedge fund, voicing their concerns about the carrier’s leadership. The hedge fund said it was concerned that Southwest might try
Good morning from Skift. It’s Friday, July 26, and here’s what you need to know about the business of travel today.
Planning and booking a fall or winter getaway just got cheaper. Southwest Airlines recently announced a new Wanna Get Away fare sale with airfares as low as $49 one-way to popular destinations. Best of all, travelers can snag discounted tickets to Puerto Rico, Hawaii, and other warm destinations throughout the winter. The fare sale ends on July 29, 2024 at 11:59 PM PST, and is valid on travel through January 29, 2025. The sale may be especially helpful for anyone planning a vacation to Hawaii, as inter-island travel is also discounted. Passengers can score $49 one-way flights from Honolulu International Airport to Hilo (Hawaii Island), Kahului (Maui), and Kona. Travel + Leisure spotted a variety of the $49 one-way fares available including:
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