Activist investor Elliott Management continues to put pressure on troubled airliner Southwest Airlines to make leadership changes.
Elliott sent a letter to Southwest Airlines on Monday in which it detailed its demands that would help the company achieve “transformational change.” The activist also stated it would move forward with its proxy fight if its demands were not met.
Earlier this year, Elliott unveiled an 11% economic interest in Southwest Airlines and began a campaign to oust the CEO Robert Jordan and make board changes. According to Elliott, the current leadership is preventing the company from returning back to profitability. Southwest responded by adopting a “poison pill” and expanding its board with former US Airways CEO Rakesh Gangwal.
In the letter, Elliott revealed the reasons why it wants to nominate 10 new directors to Southwest’s 15-person board. According to the activist investor, their proposal isn’t made with the intention to take over the control of the airliner but because they feel that the current board simply serves the interest of Jordan and executive chairman Gary Kelly instead of benefiting the company.
“We are seeking to engage with Southwest to create a better future for the Company, not for a fight. Fighting is a distraction from the business of creating value for shareholders, and our track record reflects that we much prefer working collaboratively with companies to drive value-enhancing change over engaging in proxy fights,” said Elliott in the letter.
Elliott also added that it intends to meet with Southwest Airlines in September and “remain hopeful that we will encounter at that meeting a willingness to put the central question of leadership on the table.”