Activist Investor Elliott Criticizes Southwest Again After Airline Announces Changes
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Key Takeaways
Elliott Investment Management again criticized Southwest executives following the carrier’s announcement of new revenue-enhancing efforts.
The private equity firm blamed Southwest’s management for waiting too long to make needed changes, and called for a shakeup.
Elliott took a $1.9 billion stake in the airline in June, when it first said it wanted new leadership at Southwest.
The friction between Elliott Investment Management and the leadership of Southwest Airlines (
LUV
) intensified after the
private equity
firm blasted the airline’s management for acting too late to initiate financial reforms.
On Thursday, Southwest
announced
a series of steps to boost revenue, including ending its long-held practice of open seating and offering premium seating. It also plans to begin operating on a 24-hour schedule with overnight flights.
In a statement on behalf of Partner John Pike and Portfolio Manager Bobby Xu, Elliott said that the moves come “more than a decade late, and after a 50% decline in its share price over the past three years.” It added that the actions were made by “the same leadership team that has presided over a series of failed measures to improve performance, repeated operational missteps and poor financial results.”
Elliott went on to say that management was “simply not doing its job” by failing to recognize that the desires of most of its customers were being unmet. The firm said it looks forward “to offering our fellow shareholders an opportunity to elect a Board of industry leaders that can return Southwest to best-in-class performance.”
The statement followed
similar comments
made by Elliott in June when it reported that it had taken a $1.9 billion stake in the carrier and pushed for a management shakeup.
Southwest shares fell 3.1% to close at $27.23 on Friday, bucking a broader rally for the U.S. stock market.
