Southwest To Review Elliott's Request For Shareholders' Meeting

Southwest Airlines

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(RTTNews) - Southwest Airlines Co. confirmed that its shareholder Elliott Investment Management L.P. has requested a Special Meeting of Shareholders to consider its proposals, mainly change in directors. The investor for long has been trying to overhaul the airline's leadership, demanding better performance.

Responding to the demand, Southwest said its Board will carefully review the Special Meeting request, and would discuss the process with Elliott in a constructive manner, while questioning about the investor's true intentions.

Elliott in early September had crossed the regulatory threshold to seek a special meeting after reaching 10 percent stake in Southwest.

Earlier on Monday, Elliott, which now manages funds that together hold around 11% economic interest in Southwest, had announced its request to call for a Special Meeting for December 10, 2024. The investor also said it would be filing an accompanying preliminary proxy statement with the U.S. Securities and Exchange Commission.

The investor, which launched its campaign against Southwest in June, demands to remove without cause eight members of Southwest's Board of Directors, and to elect eight Director candidates chosen by Elliott. The investor previously had demanded an immediate change of Southwest's Chief Executive Officer Bob Jordan.

Elliott also urged shareholders now to take action as soon as possible to ensure they are able to vote their shares.

Meanwhile, Southwest in its latest statement said the proposals appear to be designed to result in full control of the Board by Elliott's nominees, and urged shareholders not to take any immediate action.

Southwest added that Elliott's Special Meeting request is unnecessary and inappropriate considering the extreme nature of Elliott's demands. The firm also questioned about the timing of Elliott's request, noting that it aims to disrupt Southwest's execution of its important business transformation, which is underway as it approaches one of the busiest travel periods of the year.

The company said, "For nearly four months, Elliott has failed to offer any substantive feedback on Southwest's strategic plan. The Company was encouraged that Elliott might be turning the page ahead of Investor Day, when it requested a preview of Southwest's Investor Day materials as a condition to engaging in settlement discussions. After providing Elliott a detailed, in-person preview of the Company's plan more than a week before Investor Day, Elliott failed to provide input and continued its public attacks ahead of and following Investor Day."

According to Southwest, Elliott's failure to provide actionable feedback, coupled with the disruptive nature of its demands, should give Shareholders pause about Elliott's true intentions.

Responding to Elliott's earlier demand for immediate CEO change, the airline had stated that its Board strongly believes CEO Jordan is the right leader to successfully execute the firm's robust strategy to transform the airline.

Southwest further reiterated its various steps taken in recent months, including the next phase of its Board transformation.

In late September, Southwest had outlined next steps in a comprehensive three-year plan expected to increase revenue opportunities. The Board also approved a $2.5 billion share repurchase program, reflecting its confidence in the strategic plan and new revenue-generating initiatives.