Elliott Management addressed Southwest Airlines’ (NYSE:LUV) “revenue-enhancing initiatives” that would ditch open seating, offering premium-seating options, as well as red-eye flights, calling it “too little, too late,” as the measures come more than a decade late and after a 50% decline in its share price.
“This new plan is being proposed by the same leadership team that has presided over a series of failed measures to improve performance, repeated operational missteps and poor financial results,” Elliott Management said in an open letter to the company on Thursday.
Elliott Management, which recently acquired a $2B stake in the airline, is pushing for management change at the top, looking to oust CEO Bob Jordan and Chairman Gary Kelly. Elliott wants to see Southwest (LUV) undertake a business review in an effort to drive the share price to $49. On the heels of Elliott’s activist stake, the carrier adopted a limited-duration shareholder rights plan, also known as a poison pill, that would be triggered if an entity holds a 12.5% economic interest in the company.
“Southwest can do far better, and we look forward to offering our fellow shareholders an opportunity to elect a Board of industry leaders that can return Southwest to best-in-class performance.”
Over the past three years, Southwest (LUV) shares have eroded in value by 46% versus a gain of 23% in the S&P 500.
