Elliott Investment Management, an activist shareholder, has recently acquired a $1.9 billion stake in Southwest Airlines, according to The Associated Press
The investment firm is now pushing for the removal of the airline's CEO, citing ongoing operational and financial issues that have plagued the company.
Southwest Airlines' shares saw an 8% increase in morning trading on Monday following this development. Elliott Investment Management, in a letter addressed to the board of Southwest, expressed its dissatisfaction with the airline's stock price, which has plummeted over 50% in the past three years.
The investment firm criticized Southwest for its failure to adapt and innovate, which has negatively impacted its competitive standing in the airline industry. The firm pointed out that the Dallas-based carrier's outdated software and operational processes were the primary causes of the massive flight cancellations in December 2022.
"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," Elliott Investment Management stated in the letter, which was penned on Monday.
The firm further criticized CEO Robert Jordan for consistently delivering "unacceptable financial and operational performance quarter after quarter." It also expressed doubts about the capabilities of Jordan and former CEO Gary Kelly, who is now the airline's executive chairman, to modernize Southwest.
In response to these allegations, Southwest Airlines stated that it had been approached by Elliott on Sunday and is looking forward "to better understanding their views on our company." The airline's response suggests a willingness to engage in dialogue with the activist shareholder, indicating a potential shift in the company's future direction.
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