Southwest Airlines and Elliott Management in Settlement Talks to Avoid Board Proxy Fight

Elliott Investment Management and Southwest Airlines have started discussions in October 2024 to avert a proxy battle over the airline's board control. The hedge fund, which has held a significant stake of nearly 11%, believes that improved oversight is crucial for the airline's struggling performance. They have previously requested a special meeting of shareholders and proposed to replace eight current directors on the board, arguing that these changes are necessary for the airline's governance. Southwest Airlines responded to Elliott's demands by labeling them as "extreme" and deemed the request for a special meeting as "unnecessary and inappropriate." Despite these tensions, Elliott's recent proposition for board representation without full control indicates a willingness to reach a compromise. As negotiations progress toward a possible resolution, they remain tentative and have not yet concluded, highlighting the complexities surrounding corporate governance and stakeholder interests in the airline industry. Both parties have yet to finalize their discussions, and the outcome will influence Southwest’s strategic direction moving forward. The ongoing talks underscore the broader challenges faced by the airline as it navigates financial difficulties and seeks to implement changes that align with shareholder expectations and effective management practices.