Activist investor sends open letter to Southwest shareholders

In the ongoing battle between Southwest and Elliott Investment Management, the activist investor has sent an open letter to the airline's shareholders. The letter, signed off by partner John Pike and portfolio manager Bobby Xu, attacked Southwest CEO Bob Jordan and executive chairman Gary Kelly for ""years of mismanagement"". They added: ""The company's stock price has fallen to the depths that it reached during the COVID-related travel shutdowns in 2020."" Jordan had said in a staff memo, seen by Reuters, that the fight against Elliott was a ""battle for the heart of the company"". Elliott aims to elect 10 members to Southwest's board of 15 members. The letter added: ""We have also learned that Mr. Kelly - who preceded Mr. Jordan as CEO and hand-picked Mr. Jordan as his successor - appears to be leading a hasty and reactive process to add new directors to Southwest's board in an all-too-familiar effort to entrench its current leadership."" In a video message sent to staff, Jordan countered that it was never ""about me"". He added: ""This is about us, our collective future, and our work together to restore our performance."" He said he is ""confident"" that Southwest will achieve this goal. The airline had deployed a 'poison pill' in July to fend off against the investor. Elliott claimed Southwest has been dodging dialogue about the airline's leadership. Both sides have claimed that the other side has resisted engagement. ""The reality is that we are eager to engage with Southwest's board on the urgent changes needed at the company."" The airline has recently done away with its open seating as well as introducing premium options - a first for the airline that pioneered the low-cost carrier concept. In addition, it is now running 'red eye' flights to further compete in the marketplace. Former United Airlines CEO Oscar Munoz said in a LinkedIn post that Southwest is ""undertaking technology modernisation that will improve reliability and resiliency"". He added: ""These are changes that need time to bear fruit."" Writing in Fortune, Munoz further argued: ""Running an airline is a complex endeavour that requires more than just financial acumen. It demands a deep understanding of the industry, operational expertise, and a commitment to the company’s core values."" He continued: ""A wholesale leadership change might benefit an investor looking to quickly flip its shareholding position but could undermine Southwest in the long term."" The two companies are set to meet on September 9, 2024.