Southwest Airlines will revamp its board and the chairman will retire next year, but it intends to keep CEO Robert Jordan in a partial concession to hedge fund Elliott Investment Management, which has been pushing for changes at the airline including Jordan’s ouster.
Southwest said Tuesday that six directors will leave the board in November and it plans to appoint four new, independent directors, potentially including candidates put forward by Elliott. Shares of Southwest Airlines Co. fell 4% in morning trading Tuesday.
Elliott, the fund led by billionaire investor Paul Singer, has built a 10% stake in recent weeks and advocated changes it says will improve Southwest’s financial performance and stock price. Elliott blames Southwest’s management for the airline’s lagging stock price — even after a rally in the past month it has dropped by more than half since April 2021. The hedge fund wants to replace Jordan, who has been CEO since early 2022, and Chairman Gary Kelly, the airline’s previous chief executive.
Southwest said Tuesday that Kelly has agreed to retire after the company’s annual meeting next year. Kelly was among three Southwest directors who met with Elliott representatives Monday in New York. Six other directors — including the chairs of three board committees and former U.S. Sen. Roy Blunt, R-Mo. — will leave in November. In a letter to shareholders Tuesday, Kelly wrote that Southwest’s recovery from the pandemic has been challenging because of higher costs.
“Now is the time for change,” Kelly wrote. “It’s time to shake things up, not just stir them a bit.” He said changes to Southwest’s routes, marketing and seating will transform the airline. However, he dismissed changing the CEO, calling Jordan “a hands-on, detailed, and insightful thinker” who understands Southwest’s “unique brand” and enjoys the unanimous support of the board.