Elliott Investment Management nominated 10 candidates, including three former airline chief executives, for Southwest Airlines Co.’s board, escalating the activist investor’s push for sweeping changes at the struggling carrier.
The candidates include former Virgin America CEO David Cush; Gregg Saretsky, the former head of WestJet; and Robert Milton, the former CEO of Air Canada, Elliott Investment said in a statement Tuesday. The firm, which said in a seperate filing that it has an 8.2% stake in the airline, has to amass a 10% holding before it can seek a special meeting for investors to vote on the nominees. It expects that to occur before the airline’s annual meeting next spring.
The investor has previously demanded major changes at the carrier, including ousting CEO Bob Jordan and Chairman Gary Kelly. It’s criticized the airline for refusing to adopt changes that have spread across the industry, causing its stock to plummet over the last few years.
Other candidates on Elliott’s slate include former Ryanair Holdings Plc Deputy CEO Michael Cawley, Sarah Feinberg, a former senior official at the Department of Transportation, and Nancy Killefer, a former McKinsey senior partner and current board member of Meta Platforms Inc.
Southwest hasn’t heard from Elliott and isn’t aware of its plans, a spokeswoman said earlier.
Southwest shares rose 1% at 6:38 p.m., after the end of regular trading in New York. The stock has tumbled 12% this year through Tuesday’s close.
The airline announced dramatic changes to its business model last month, including assigned seating, a new premium-class option and plans for red-eye flights — moves the company sees as boosting sales and enhancing its appeal. While Southwest said earlier this year that it was considering the changes, it faced heightened pressure to revamp under-performing operations from Elliott.
Southwest has struggled this year with slowing growth, fewer-than-expected aircraft deliveries from Boeing Co. and a series of flight-safety incidents that triggered a Federal Aviation Administration review. Strains on the business were underscored in the company’s recent guidance that revenue and costs in the current quarter were worse than Wall Street’s estimates.
Elliott has criticized Jordan and Kelly, who was CEO prior to Jordan, for poor execution and a “stubborn unwillingness to evolve the company’s strategy.” They are “not up to the task of modernizing Southwest,” the activist has said. It’s also called for a reconstituted board, criticizing the lack of airline experience and independence among current members.
Southwest last month named a veteran airline industry executive to its board to help address other concerns raised by Elliott. The carrier also adopted a “poison pill” shareholder rights plan to discourage the activist from gaining a larger share.
