Elliott Investment Management has formally requested a special shareholder meeting with Southwest Airlines (LUV) in order to shake up the firm’s leadership, according to news reports. This would be the activist investor’s first U.S. proxy fight since 2017.
Elliott Intends to Replace LUV’s Board Members
Elliott currently has an 11% stake in Southwest, has nominated eight directors to the airline’s board, and aims to replace the same number of board members. The special meeting is expected to take place on December 10, according to Bloomberg.
After a meeting with Elliott last month, Southwest announced that six board members, including Chair Gary Kelly, would step down, and the company reduced the board size from 15 to 12 seats.
Elliott Has Been Critical of LUV’s Leadership
Elliott has criticized Southwest’s leadership for the airline’s long-term underperformance. Earlier this year, Elliott disclosed a $2 billion stake in Southwest and demanded strategic reforms. In response, Southwest introduced a share buyback program and announced an end to its open seating policy at an investor day in September.
Additionally, Southwest adopted a poison pill strategy in July to protect itself from Elliott’s attempts to acquire the airline.
Is LUV a Good Buy Right Now?
Analysts remain sidelined about LUV stock, with a Hold consensus rating based on two Buys and nine Holds. Over the past year, LUV has surged by more than 15%, and the average LUV price target of $28.75 implies a downside potential of 4.8% from current levels.
