An investment firm takes a $1.9 billion stake in Southwest Airlines and wants to oust the CEO

Activist shareholder Elliott Investment Management has bought a $1.9 billion stake in Southwest Airlines and is seeking to force out the CEO of the airline, which has struggled with operational and financial problems.

Shares in the airline rose 7 percent Monday, 10 June, their second-best day since 2020.

In a letter to Southwest’s board, the investment firm complained that Southwest’s stock price has dropped more than 50 percent in the last three years. Elliott said Southwest has failed to evolve, hurting its ability to compete with other carriers. The firm blamed the Dallas-based carrier’s massive flight cancellations in December 2022 on what it described as the airline’s outdated software and operational processes. “Poor execution and leadership’s stubborn unwillingness to evolve the Company’s strategy have led to deeply disappointing results for shareholders, employees and customers alike,” the investment firm said in the letter, dated Monday.

Southwest CEO Robert Jordan “has delivered unacceptable financial and operational performance quarter after quarter,” the letter read. It said Jordan and former CEO Gary Kelly, now the airline’s executive chairman, “are not up to the task of modernizing Southwest.”