Southwest Airlines settles boardroom feud with activist investor Elliott
Updates share price, analyst comments in paragraphs 3, 8-10
CEO Bob Jordan to retain job, Executive Chairman Gary Kelly will accelerate retirement
Southwest to add six directors to board
Southwest reports surprise profit for third quarter
By Rajesh Kumar Singh, Svea Herbst-Bayliss, Shivansh Tiwary
Oct 24 (Reuters) -Southwest Airlines LUV.N and its activist investor Elliott Investment Management ended a bitter months-long boardroom battle on Thursday in a deal that allows CEO Bob Jordan to retain his job by making bigger board-level concessions.
The agreement came as the U.S. carrier reported a surprise third-quarter profit, benefiting from improved pricing and demand, as well as rebookings from passengers stranded due to the global cyber outage in July.
Southwest's shares, however, were down 4.2% in midday trade as its revenue outlook for the fourth quarter disappointed.
As part of the deal, the Dallas-based airline will add five Elliott nominees to its board, making it the most seats the hedge fund has ever gotten in a settlement with a company in the United States. The airline previously offered to appoint up to three of Elliott's candidates.
Among other concessions, Executive Chairman Gary Kelly will accelerate his retirement to next month. Kelly previously had plans to retire in the spring after Southwest's annual meeting.
Elliott had been pushing for months to refresh the board and remove Kelly and Jordan, blaming them for the airline's poor performance. But Southwest held fast to its chief executive.
The fight between the carrier and the activist investor reached a new high last week when Elliott made good on a threat to take the battle to all shareholders by calling for a special meeting in December to let investors vote on board candidates.
"It's a very good outcome for Elliot," said Keith Gottfried, CEO of shareholder activism defense firm Gottfried Shareholder Advisory. "It reinforces their ability to get things done at large companies."
The agreement also saves Southwest from the distraction of a proxy fight, allowing it to focus on the initiatives Jordan outlined last month to turn the business around.
Gottfried said Jordan now faces the pressure to deliver on the turnaround strategy as the issue with Elliott remains "potentially unresolved, if not unresolved."
Southwest has struggled to find its footing after the pandemic, in part due to Boeing's BA.N aircraft delivery delays and industry-wide overcapacity in the domestic market.
The airline unveiled several initiatives last month to shore up sagging profits, including partnerships, vacation packages for customers and aircraft sale leasebacks. It will add seats with more leg room and drop its marquee open seating system in a bid to grow high-margin revenue.
Elliott nominees David Cush, who served as CEO of Virgin America, and Gregg Saretsky, former CEO of WestJet, as well as Sarah Feinberg, Dave Grissen and Patricia Watson will join the board. Pierre Breber, former CFO of Chevron, will also be appointed to the board.
The six newcomers will join next month. The board will have 13 members at its annual shareholder meeting next year.
Cush, Saretsky and three additional directors will also serve on a committee that will assist in the oversight of Southwest's operational and strategic plans.
Elliott said the strategic changes along with a revamped board and governance improvements will help in creating "long-term shareholder value."
Southwestreported an adjusted profit of 15 cents per share, compared with analysts' average estimate of break-even on a per-share basis, according to data compiled by LSEG.
It expects fourth-quarter revenue per available seat mile, a proxy for pricing power, to be up 3.5% to 5.5% on a projected capacity reduction of about 4%.
Reporting by Rajesh Kumar Singh in Chicago, Shivansh Tiwary in Bengaluru and Svea Herbst-Bayliss in New York; Editing by Arun Koyyur, Chizu Nomiyama and Mark Porter
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
