Elliott Investment Management reportedly invested nearly $2 billion in Southwest Airlines and plans to push for leadership changes within the company.
The firm is one of the largest investors in the Dallas-based airline, which has a market capitalization of $16.6 billion. Elliott reportedly owns an 11% stake in Southwest, according to The Dallas Morning News.
Southwest’s share price has decreased by more than 50% in the last three years, closing on Friday at $27.75. Friday’s figure is lower than the traded price during the COVID-19 lockdowns, per The Wall Street Journal.
Elliott partner John Pike and portfolio manager Bobby Xu reportedly sent a letter to Southwest’s board, criticizing the organization for “poor execution and leadership’s stubborn unwillingness to evolve the Company’s strategy,” per Investopedia.
As previously reported by The Dallas Express, Southwest has come under fire for its commitment to “diversity, equity, and inclusion” initiatives, like prioritizing race-conscious hiring.
The company said earlier this year that it plans on “doubling racial diversity” and “increasing gender diversity” on its “Senior Leadership team by 2025.” Southwest said it would also increase “diverse representation on the Southwest Airlines Board of Directors,” according to an internal company presentation posted on X.
Elliott is expected to push for significant changes within the company, explicitly noting that Southwest’s CEO Bob Jordan has delivered “unacceptable” financial outcomes since he took over in February 2022.
“We believe that new leadership is required at Southwest,” wrote the firm in its letter to the board, per Reuters.
A statement released by the board in response to the letter said that “[t]he Southwest Board of Directors is confident in our CEO and management’s ability to execute against the company’s strategic plan to drive long-term value for all shareholders, safely and reliably serve our customers and deliver on our commitments to all of our stakeholders,” a spokesperson said, per ABC News.
Southwest is still expecting to perform well during the upcoming summer months due to increased travel, with the expectation of a record-high quarter, per the WSJ.
Although there is no indication about whether Elliott plans to adjust the “Diversity, Equity, and Inclusion” policies implemented at Southwest, the investor has previously facilitated changes in Crown Castle, NRG Energy, and Goodyear Tire & Rubber.
Crown Castle boasts about these initiatives on its website, featuring a graph depicting the “Diversity among new hires,” specifying the number of new employees who were either white or of color.
Similarly, NRG Energy’s website describes the “21-member, cross-functional team to develop actionable recommendations that enhance diversity, equity, and inclusion across the enterprise.” At the same time, Goodyear notes that “Diversity & Inclusion is also a business imperative” for the company.