Southwest's Boardroom Battle as Investor Seeks 10 New Members

14.08.2024 - 18:00 / skift.com / Gary Kelly / Bob Jordan / Gordon Smith

Southwest Airlines’ activist investor is ramping up the pressure on the carrier’s leadership team. Late on Tuesday, Elliott Investment Management published a list of ten candidates that it wants to see on Southwest’s board. It said this followed a “months-long global search.”

Among them are four former airline CEO and/or deputy CEOs. Other nominees come from what Elliott describes as “complementary” sectors. 

The big names include David Cush, former CEO of Virgin America, Dave Grissen, former Group President of Marriott International and Michael Cawley, the former deputy CEO of Ryanair. There are currently 15 members on Southwest’s board of directors.

In June, Elliott took a $1.9 billion stake in Southwest, making it one of the carrier’s largest investors. Since then, it has engaged in a fiery war of words with the airline’s leadership team. 

Just last month, Elliott partner John Pike and portfolio manager Bobby Xu wrote a public letter to the airline’s board. “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,” said the pair.

In an open letter, Elliott claims the nominees offer Southwest shareholders a different approach: “When nominated, these Candidates would give shareholders a choice between the Company’s existing Board, which has delivered poor returns for shareholders and has not held management accountable for Southwest’s unacceptable performance, or a new Board that brings relevant expertise, fresh thinking and accountability,” Elliott said.

In earlier developments, Elliott pushed to replace both Bob Jordan, who has been chief executive since 2022, and executive chair Gary Kelly, who was Jordan’s predecessor as CEO. Jordan has publicly resisted calls to step down.

In July, Southwest added longtime airline executive and IndiGo co-founder Rakesh Gangwal to its board. The move was the airline’s latest defense from the hedge fund which has previously criticized Southwest’s leadership for not having enough external aviation experience. 

Gangwal was previously the CEO and chairman of U.S. Airways and held executive roles at United Airlines and Air France. He helped found IndiGo, a low-cost carrier that has become the biggest airline in India.

On Wednesday morning, Southwest issued a sharply worded statement in response to Elliott’s nominations. “Since Elliott launched its campaign against Southwest Airlines, the Board has consistently sought to engage constructively and in the best interests of all Shareholders. Elliott has dismissed those efforts at every turn.

“After Elliott recently agreed to a meeting with Southwest Airlines in