Southwest and activist investor Elliott strike deal to keep CEO Bob Jordan, add six new directors

Southwest Airlines and activist hedge fund Elliott Investment Management struck a deal to avert a proxy fight in exchange for naming six directors to the airline’s board — short of board control — and an earlier retirement for Executive Chairman Gary Kelly. Southwest CEO Bob Jordan will keep his job as part of the deal. “We are pleased to have come to an agreement with Southwest on the addition of six new directors that will enhance and revitalize its Board,” Elliott’s John Pike and Bobby Xu said in a statement Thursday. Five of Elliott’s board nominees along with former Chevron CFO Pierre Breber will join the board, which will stand at 13 members, Southwest said. The Southwest board will appoint a new chairman to replace Kelly, who will now step down next month instead of next year. Elliott had called for both Kelly and Jordan’s ouster and criticized the airline’s leadership for not moving fast enough on sales- and profit-boosting strategies. The airline has made few changes to its business model in its 50 years of flying and is now planning to upend its long-standing policies like open seating and a single-class cabin for premium seats that more profitable carriers like Delta Air Lines offer. Southwest’s shares are up less than 1% this year while the S&P 500 has risen 21%. The airline’s third-quarter profit, also announced Thursday, topped analysts’ estimates. Shares in the carrier were down roughly 6% in midday trading. The Dallas-based carrier has been slashing unprofitable routes to cut costs. At an investor day last month, it said the new revenue initiatives and other changes put it on track to boost earnings before interest and taxes in 2027 by $4b. The airline also authorized a $2.5b buyback, the first $250m of which was announced Thursday. <br/>