Activist Investor Elliott Prepares to Board Southwest Airlines, with Full Carry -On of New Directors

Paul Singer to Southwest Airlines: “F*** around and find out”

Well it looks like Southwest is about to get a full dose of Paul Singers’ hatorade as his hedge fund, Elliot Investment Management, has officially called for a special shareholder meeting set for December 10. And they’re bringing receipts (and boardroom replacements).

(Source: Giphy) 

In short, Paul Singer is looking to wreak havoc on Southwest by replacing eight of the company's current board members (you know, the ones who’ve been guiding the airline through a -42.07% nosedive the past five years) with his own hand-picked squad of certified bada$$es. We’re talking people like Michael Cawley, former Ryanair deputy CEO, and David Cush, former Virgin America CEO, among others.

(Source: New York Post) 

In fact, according to Elliot’s Partner John Pike and Portfolio Manager Bobby Xu, these nominees are the key to saving Southwest from itself. The current leadership? Not cutting it, says Elliott. They’ve been on what the hedge fund calls a “go-it-alone” path, which sounds less like a solid business strategy and more like my rebellious teenage years that accumulated more regret and poor life choices than I’d like to admit.

(Source: Giphy) 

But alas, in Elliots boardroom diss track open letter to shareholders, the activist fund says Southwest management’s new initiatives are just setting the stage for tomorrow’s broken promises. In other words, they’re tired of the airline’s leadership telling passengers (and investors) that everything’s fine while the stock has plunged -50% from its 2017 highs. 

(Source: AP) 

Now with that said, sure the stock is up 9% YTD, but let’s be honest, that performance has more to do with investors and market sentiment’s hope for Elliot to pull off a miracle with the company. Not necessarily the fact that Southwest itself has been doing anything worth writing home about. 

(Source: Giphy) 

Of course, the airline has tried to shake things up by rolling out new legroom options, phasing out its beloved open seating system, and even dipping its toes into red-eye flights. But for Elliott, these changes are mediocre at best and about as effective as Aaron Rodgers’ bone joints. 

Which is why the real action is centered around CEO Bob Jordan and Executive Chairman Gary Kelly. While Kelly has already committed to stepping down next year (May 2025, to be exact), Jordan is still very much in Elliott’s crosshairs. They’ve been loudly advocating for his removal (including launching a podcast to build support) and with the boardroom shake-up, they’re hoping to install new leadership that’ll actually steer the airline back to profitability.

(Source: Quartz) 

And let’s be real—Southwest could use some fresh blood. The airline has been struggling to recover post-pandemic, and Elliott’s not convinced that the current team has what it takes to turn things around. Pike and Xu have been vocal about what they see as a leadership team in “full self-preservation mode,” which is a nice way of saying they think the executives are just trying to save their own jobs while the company flounders.

But, but, but…. Southwest isn’t exactly rolling over and letting Elliott take the controls, though. In a statement, the airline shot back, warning that any leadership changes at this critical juncture would be “detrimental to all shareholders.” Translation: They think Elliott’s power play could cause more turbulence than it’s worth.

(Source: Giphy) 

However, in the grand scheme of things… money talks, and shareholders might be ready for a mutiny. With the stock down over the past five years but up 8% in 2024, they’re getting restless. And Elliott, armed with its 10-director slate, is hoping to capitalize on that frustration.

So it’s clear the clock is ticking for Southwest’s current leadership. Elliott’s special shareholder meeting could be the last boarding call before carnage sends longtime execs updating their LinkedIn profiles. Of course, only time will tell… but for now, expect some major management overhauls ahead. 

(Source: Seeking Alpha) 

In the meantime, with Southwest down -50% from its 2017 highs combined with a bit of Elliot Management hope, this could definitely be a looming “BTFD” opportunity in the making. But again, until more details arise on the matter, including whether Elliot gets its way - I’ll gladly watch Southwest at a distance… for the time being.

As always, do what you will with this information and most importantly - stay safe and stay frosty, friends! Until next time… 

P.S. Are you ready?! We are about to drop our next explosive alert very, very soon… so make sure you click here asap before this stock starts moving! 

Stocks.News doesn’t hold any positions in companies mentioned in the article.