Elliott Investment Management has taken a stake worth approximately $1.9 billion in Southwest Airlines, the investment firm announced Monday, and in a letter to the carrier's board of directors called for Southwest CEO Bob Jordan to be replaced, according to a copy reviewed by BTN.
The letter and accompanying presentation notes that in the past three years, Southwest's share price has declined by more than 50 percent and has fallen below the levels at which it traded in March 2020, at the beginning of the pandemic.
"Since his appointment, Southwest CEO Bob Jordan has delivered unacceptable financial and operational performance quarter after quarter, resulting in seven negative guidance revisions in the last 17 months," according to the letter. "Even as the Company's performance has deteriorated, Jordan has demonstrated a surprising level of complacency, describing each quarter as 'great' or 'strong' while the earnings outlook continues to fall."
Elliott also called out Southwest's operational meltdown in December 2022.
Southwest on Monday evening in a statement said it was first contacted by the investment firm yesterday, and "reiterated its willingness to meet with Elliott Investment Management to further discuss the airline's strategy and to enhance value for all shareholders."
The carrier said it is "thoughtfully reviewing" the letter and presentation and noted its confidence that Southwest "has the right strategy, the right plan and the right team in place to drive long-term value for our shareholders."
Southwest in April reported a first-quarter net loss of $231 million, wider than many analysts expected, and Jordan was "disappointed in our first-quarter performance." The carrier also announced plans to pull out of four airports, reduce service at Chicago O'Hare and Atlanta, and reduce headcount by 2,000 employees as cost-cutting measures.
In May, the carrier also increased its fees for EarlyBird Check-In to $15 to $99 one way, depending on availability, with pricing varying based on the popularity and length of each flight, according to Southwest. The previous range was $15 to $25. The Upgraded Boarding price also increased and now costs $30 to $149 per segment, per customer. The prior price range was $30 to $80.
Elliott is part of the ownership group of Travelport, which took the company private in 2019.