MW Southwest agrees activist investor Elliott can own up to 19.9% stake until 2026

By Ciara Linnane

Airline also says Chief Transformation Officer Ryan Green is stepping down in April

Southwest Airlines Co. has amended its agreement with activist shareholder Elliott Management, allowing Elliott to hold a maximum 19.9% stake in the airline until the day after its 2026 annual shareholder meeting.

Under the previous agreement, Elliott could hold just a 14.9% stake in Southwest $(LUV)$. The agreement stretches to 9 a.m. Central on April 1, 2026.

Southwest announced the amendment in a regulatory filing.

The filing also disclosed that Ryan Green, executive vice president and chief transformation officer, has informed the company of his plan to step down effective April 1, 2025. The filing did not offer any further information on Green's decision.

Southwest has bent to Elliott's activism by agreeing to add six new independent directors to its board. Elliott had called for "a thorough reconstitution" of the board, among other demands.

The airline is in the midst of a transformation that led it to announce Tuesday the first-ever involuntary layoffs, with a plan to cut 1,750 corporate positions, affecting senior leadership and directors - but not pilots and crew.

"This decision is unprecedented in our 53-year history, and change requires that we make difficult decisions," Chief Executive Bob Jordan acknowledged in prepared remarks.

Southwest has prided itself on the fact that it has never had an involuntary layoff - not even after the 9/11 terrorist attacks or the 2008 financial crisis.

The cuts are part of a bigger plan to overhaul operations that was first unveiled last year, after Southwest surprised investors with a bigger-than-expected first-quarter loss and revenue that fell short of estimates.

The airline said it would take a series of measures, including ending its hallmark open-seating policy and increasing its premium-seating options with extra-legroom seats. Southwest is also launching red-eye flights.

Lower-cost airlines are under pressure from their bigger rivals, which have come out of the pandemic in a stronger financial position and are now benefiting from trends such as demand for premium travel and trans-Atlantic routes.

Southwest has less exposure to those trends and routes.

Now read: Looking for winning airline stocks this year? BofA says to avoid Southwest and JetBlue.

Southwest's stock was up 0.4% premarket but is down 11.6% in the last 12 months, while the US Global JETS exchange-traded fund JETS has gained 29.7% and the S&P 500 SPX has gained 22.5%.

-Ciara Linnane

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February 19, 2025 07:08 ET (12:08 GMT)

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