Southwest Chair Gary Kelly to step down amid activist pressure
Kelly served as CEO for 18 years before stepping down in 2022
FOX Business Flash top headlines for September 9
Check out what's clicking on FoxBusiness.com.
Southwest Airlines Executive Chairman Gary Kelly announced on Tuesday that he will retire after the carrier's annual meeting next year.
Six current directors informed the board of their plans to voluntarily step down immediately after the company's regularly scheduled board meeting in November.
The board, meanwhile, reiterated its support for CEO Bob Jordan, who took the reins of the airline after Kelly stepped down from the role after 18 years in 2022.
SOUTHWEST AIRLINES' BATTLE WITH ACTIVIST INVESTOR HEATS UP: ARE FREE BAGS ON THE CHOPPING BLOCK?
The news comes as the Dallas-based carrier faces growing pressure from activist investor Elliott Investment Management to make sweeping changes, including at the board level. The investment firm and the carrier's board met on Monday to discuss "refreshment efforts" at the company, and other corporate governance changes amid a tumultuous time for the carrier.
In the meeting with Elliott, "we shared a specific framework to address its concerns about corporate governance and performance, and we are continuing to engage constructively toward a collaborative resolution in the near term," Kelly said in a letter to shareholders on Tuesday. "In the meantime, it is important that we not delay the meaningful Board refreshment and corporate governance changes already underway, which we discussed with Elliott."
A Southwest Airlines Boeing 737 Max 8 airplane in Baltimore, Maryland. (Angus Mordant/Bloomberg via Getty Images / Getty Images)
The airline has been facing an activist investor challenge from Elliott since June. The investment firm has called for a "comprehensive" review of Southwest's business and continues to increase its stake in the carrier.
SOUTHWEST AIRLINES CEO SAYS NO PLANS TO STEP DOWN DESPITE PRESSURE FROM ACTIVIST ELLIOTT
As part of Elliott's push for a business review, it said the airline has "written off key commercial innovations and revenue opportunities across the airline industry" in the past, like checked bag fees.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LUV | SOUTHWEST AIRLINES CO. | 33.00 | +0.64 | +1.98% |
In Tuesday's letter, Kelly told shareholders that the years emerging from the pandemic had been "especially challenging, with soaring industry costs and capacity," and that the carrier's performance had fallen short of its expectations.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Since last year, a "thorough, comprehensive, and urgent analysis and evaluation of our strategy has been underway," Kelly said. He believes this will help strengthen the carrier's position.
FOX Business' Aislinn Murphy contributed to this report.