Back and forth between airliner Southwest Airlines and activist investor Elliott Management continued this week. In a recent letter to the Southwest board, Elliott has issued a proxy threat if its demands for leadership change continue to be ignored.
Elliott recently revealed that it owns 11% of Southwest while publicly requesting sweeping changes in the airliner due to “underperformance and a failing corporate culture.” Southwest responded by adopting a “poison pill” that basically limits a single shareholder to acquire more than a 12.5% stake while also adding aviation industry veteran Rakesh Gangwa, co-founder of InterGlobe Aviation, to its board.
The moves made by Southwest are being perceived by Elliott as “entrenchment maneuvers.” The activist investor said in the letter sent to Southwest board on Monday that it is still open for collaboration but said that it is ready to take actions that would allow shareholders a “direct say.”
“Elliott indicated that it is open to collaborating with the Board on a path forward, but absent alignment Elliott intends to move expeditiously to give shareholders a direct say on the necessary leadership changes,” Elliott wrote.
The tense situation between Elliott and the airliner didn’t result in much movement for the Southwest stock. The company’s shares saw a marginal 1.45% jump on Monday, closing at $27.35 per share.