FILE – A Southwest Airlines jet waits for departure on the runway at Denver International Airport, Friday, Sept. 1, 2023, in Denver. Activist investor Elliott Investment Management has taken a $1.9 billion stake in Southwest Airlines. The investment firm said Monday, June 10, 2024, that Southwest has been unable to keep up with other airlines and suffers from outdated technology and operations. (AP Photo/David Zarbowski, File)
DALLAS (AP) — Activist investor Elliott Investment Management is buying a $1.9 billion stake in Southwest Airlines Inc. in a bid to oust the airline’s CEO as it struggles with management and financial problems.
The airline’s shares were up 8% in morning trading on Monday.
In a letter to Southwest’s board of directors, the investment firms complained that the airline’s stock price has fallen more than 50 percent over the past three years.
The company said Southwest’s failure to evolve is hurting its ability to compete with other airlines. The Dallas-based airline said its software and business processes are outdated, which is why it canceled a large number of flights in December 2022.
“Poor execution and management’s stubborn refusal to evolve the strategy have resulted in extremely disappointing results for all of our shareholders, employees and customers,” the investment firm said in a letter dated Monday.
Elliott said CEO Robert Jordan “has delivered unacceptable financial and operational performance quarter after quarter.” The company said Jordan and former CEO Gary Kelly, who is now chairman of the airline’s board, “are not up to the task of modernizing Southwest.”
Southwest said it heard from Elliott on Sunday “and wants to better understand their views of the company.”
“Southwest’s board of directors is confident in the CEO and management team’s ability to execute on our strategic plan to create long-term value for all shareholders, serve our customers safely and reliably, and deliver on our commitments to all stakeholders,” the spokesman said in a statement.
