There¡¯s possible trouble inside the
Southwest Airlines family.
Lack of financial success this year has
led to wariness from some investors, notably Elliott Management, which has
called for a special meeting of the airline¡¯s governing body. Elliott Management
owns more than 10 percent of shares in the carrier. It has publicly called for
the removal of CEO Robert Jordan.
The meeting could happen as soon as next
week. This comes on the heels of several changes in the board of directors as
the airline hopes to avoid a proxy fight.
¡°We believe that competent new leaders,
working through a deliberate and thoughtful process, should chart the course
forward for Southwest,¡± Elliott partner John Pike and portfolio manager Bobby
Xu said in a letter to shareholders. ¡°We do?not?support the Company¡¯s
current course, which is being charted in a haphazard manner by a group of
executives in full self-preservation mode.
Southwest responded
in a statement by saying: ¡°Any Leadership change amid such a significant
transformation would be detrimental to all Shareholders, and handing control of
the Board to Elliott and its Director candidates ¨C when Elliott has not
articulated any ideas for improving Southwest¡¯s business plan and operations ¨C
would present a catastrophic risk to Shareholders.¡±?
Nothing is imminent ¨C the process usually
takes months as both sides look to garner support from shareholder candidates
for the Board of Directors. Southwest previously tried to assuage some
investors by changing parts of its business model, including ditching open
seating and inaugurating red-eye flights.
It apparently hasn¡¯t helped the situation.
¡°The need for change is urgent, and our
request for a special meeting may come as soon as next week,¡± Pike and Xu wrote.
Earlier this week, Southwest told its
employees to brace for what could
be some ¡®tough decisions.¡¯
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