Activist investor Elliott Investment has built a stake of nearly $2 billion in Southwest Airlines|Werner Lehmann|CC BY-SA 2.0
Elliott Investment Management, an activist investor in Southwest Airlines, wants to change the company’s leadership to improve its financial and stock performance, according to the Wall Street Journal.
The activist investor hedge fund revealed yesterday that it has built a stake of nearly $2 billion (which comes to a little more than 10%) in Southwest, positioning itself as among the largest shareholders of the struggling airlines. Now, it is pushing to replace current CEO Bob Jordan.
Southwest’s stock went up 7.4% on the news.
Why the pressure?
Jordan became Southwest’s CEO in February 2022, taking over from Gary Kelly. Elliott believes Southwest needs new leadership because Jordan’s strategy isn’t working well any longer.
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The low-cost airline has struggled since the COVID-19 pandemic, with its stock price dropping by over half in three years.
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The airline also had a major meltdown during the 2022 holidays due to tech issues.
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It expects fewer new planes from Boeing (which has its own woes) this year, which has hurt the company’s growth plans.
Southwest responded by expressing confidence in its current leadership and plans.