The activist investment firm that is seeking to reshape the Southwest Airlines board intends to call for a special shareholder meeting as soon as next week.
In a letter to shareholders Tuesday, Elliott Investment Management partner John Pike and portfolio manager Bobby Xu accused Southwest management and its board of undertaking a "chaotic series of defensive actions" since Elliott took an 11% stake of the company in June and began calling for the dismissal of CEO Bob Jordan and chairman Gary Kelly.
"In the coming weeks, we will be formally requesting a special meeting to provide you with a choice between the new directors that we have put forward -- who we believe possess the qualifications and skills to guide Southwest to a brighter future -- or a board that lacks relevant expertise and has pre-committed itself to supporting failed CEO Bob Jordan," Pike and Xu wrote.
Elliott has also put forward a slate of 10 potential board members.
Tuesday's letter went out two days before Southwest will hold an event at its headquarters in Dallas, where it plans to provide new details related to its plan to begin offering extra-legroom seats and to replace its unique open boarding with assigned seats. Southwest management has also hinted that it will be announcing additional business transformation plans on Thursday as well.
Kelly is stepping down as chairman
Under pressure from Elliott, the carrier announced two weeks ago that Kelly would step down as board chairman at the company's annual meeting next spring and that six of the company's 15 board members will step aside in November. The board also said it would appoint four new board members, including up to three from the slate of candidates proposed by Elliott.
Still, those changes would leave a majority of the current board, which supports Jordan as CEO, in place.
Elliott could seek a proxy vote
If it calls for a special meeting, Elliott would seek a proxy vote ahead of Southwest's annual shareholders meeting, which typically takes place in May.
In their letter, Pike and Xu urged Southwest investors to make sure they quickly position all of their shares to eligible to be voted, warning that Southwest could use a tactic known as a "false record date" as soon as Oct. 7 to limit the number of shareholders eligible to vote.
Travel Weekly has reached out to Southwest for comment.