Elliott confirms $1.9B Southwest stake, thinks shares can hit $49

Elliott Investment Management confirmed it has an investment of $1.9B in Southwest Airlines and said it sent a letter today to the company’s board. “The letter substantiates Elliott’s view that Southwest’s poor execution and leadership’s stubborn unwillingness to evolve the Company’s strategy have led to deeply disappointing results for shareholders, employees and customers alike. Southwest’s rigid commitment to a decades-old approach has inhibited its ability to compete in the modern airline industry, Elliott said, and this ethos pervades the entire business with outdated software, a dated monetization strategy and antiquated operational processes. Elliott’s letter asserts that the Company’s failure to modernize is underscored by Southwest’s December 2022 operational meltdown, which stranded more than two million travelers over the holidays…By executing on the Stronger Southwest plan, Elliott believes the Company can return to its rightful position as an industry leader, including generating best-in-class margins and compelling returns for its shareholders. In doing so, Elliott argues that Southwest’s stock can achieve $49 per share within 12 months, representing a highly attractive 77% return during the period,” the fund said in a release. Southwest shares in early trading are up 7% to $29.74.