Activist investor takes $1.9 billion stake in Southwest Airlines, seeks to oust CEO and chair

Activist hedge fund Elliott Management has amassed a $1.9 billion stake in Southwest Airlines and plans to push for leadership changes at the airline that has lagged big rivals.

The stake makes Elliott one of Southwest’s largest shareholders, according to FactSet. Shares of Southwest were up 7% in premarket trading Monday.

The company had a market capitalization of $16.6 billion as of Friday’s close.

Southwest has struggled with delays at Boeing of new 737 Max planes, the newest models of the plane which the carrier exclusively flies, as well as shifting travel demand patterns after the pandemic.

The airline’s leaders are now looking for new ways to drum up revenue to better compete with rivals that offer travelers more perks and products. Southwest CEO Bob Jordan, who took the helm in February 2022 after decades with the airline, told CNBC in April that the carrier is considering ditching its single class of airplane seating and longtime boarding method.

The airline also faced a reckoning from a holiday meltdown at the end of 2022 that cost it more than $1 billion and forced the airline long known for good customer service to win over the flying public and make quick fixes to its internal staff scheduling software.

Southwest shares are down by more than 50% from three years ago when travel demand, led by domestic trips, was starting to come back. In contrast, Delta Air Lines shares are up around 10% over that period and United Airlines are down about 7%.

Elliott’s campaigns at other companies have likewise centered on a change in leadership. Elliott’s second campaign at Crown Castle in 2022 and settlement agreement with automotive parts supplier Sensata earlier this year are just two instances.

In just the last few months, the activist has taken a $2.5 billion stake in semiconductor firm Texas Instruments, a $2 billion stake in Japanese conglomerate SoftBank and a $1 billion stake in mining concern Anglo American.