A Southwest Airlines Boeing 737-7Q8 takes off from Ronald Reagan Washington National Airport in Arlington Virginia on August 13, 2024.
Daniel Slim | Afp | Getty Images
Activist investor Elliott Management is preparing to launch a proxy fight at Southwest Airlines, and intends to nominate as many as 10 directors to the company’s 15-person board, according to a person familiar with the matter.
Elliott plans to call a special meeting, rather than waiting for the company’s annual shareholder meeting, the person said. Southwest’s last shareholder meeting was held in May.
The activist has already amassed an economic interest of roughly 11%, although only 7% is in common stock. Elliott needs to own at least 10% of the company in order to call a special meeting, under Southwest’s bylaws, a threshold that it will likely cross soon.
The 10-person slate will not include any Elliott employees, the person said.
Southwest last month announced the biggest changes to its business model in its more than 50 years of flying, with the end of its open seating model and premium seating that will come with extra legroom.
Southwest had been studying such changes for years, but an oversupplied U.S. market has driven down fares, forcing the carrier and its rivals to adopt new business models to drum up revenue. Budget carrier Spirit Airlines, for example, recently said it would start selling a sort of business class with its bigger seats at the front of the cabin that will come with complimentary Wi-Fi, snacks, drinks and checked luggage.
The airline’s executives will discuss its strategy in more detail during an investor day next month.
A representative for Southwest did not immediately return a request for comment. News of Elliott’s plans was reported earlier by the Wall Street Journal.
CNBC’s Leslie Josephs contributed to this report.
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