SOUTHWEST AIRLINES COMMENTS ON ELLIOTT MANAGEMENT'S SPECIAL MEETING REQUEST
Southwest Airlines (NYSE: LUV) has responded to Elliott Investment Management's request for a Special Meeting of Shareholders. Elliott seeks to remove eight Board members and elect its own candidates, potentially gaining full Board control. Southwest's Board deems this request unnecessary and disruptive to ongoing business transformation efforts.
The Board has attempted to reach a resolution, offering to appoint up to three of Elliott's candidates to a reconstituted Board. However, Elliott demands effective control of both Board and management. Southwest criticizes Elliott's lack of substantive feedback on the company's strategic plan and questions its true intentions.
Southwest reiterates recent actions taken, including comprehensive Board refreshment, corporate governance changes, and implementation of a three-year transformational plan aimed at driving revenue growth and restoring industry-leading profitability. The plan is expected to deliver approximately $4 billion in cumulative incremental run rate EBIT contribution by 2027.
Southwest Airlines (NYSE: LUV) ha risposto alla richiesta di Elliott Investment Management per una Riunione Speciale degli Azionisti. Elliott cerca di rimuovere otto membri del Consiglio di Amministrazione ed eleggere i propri candidati, potenzialmente guadagnando il pieno controllo del Consiglio. Il Consiglio di Southwest giudica questa richiesta non necessaria e dirompente per gli sforzi di trasformazione aziendale in corso.
Il Consiglio ha tentato di raggiungere una risoluzione, offrendo di nominare fino a tre candidati di Elliott in un Consiglio ristrutturato. Tuttavia, Elliott richiede un controllo effettivo sia del Consiglio che della gestione. Southwest critica la mancanza di feedback sostanziale da parte di Elliott sul piano strategico dell'azienda e mette in dubbio le sue vere intenzioni.
Southwest ribadisce le azioni recenti intraprese, tra cui un'ampia ristrutturazione del Consiglio, cambiamenti nella governance aziendale e l'implementazione di un piano di trasformazione triennale volto a stimolare la crescita dei ricavi e a ripristinare la redditività da leader di settore. Si prevede che il piano fornisca circa 4 miliardi di dollari di contributo cumulativo in EBIT incrementale entro il 2027.
Southwest Airlines (NYSE: LUV) ha respondido a la solicitud de Elliott Investment Management para una Reunión Especial de Accionistas. Elliott busca remover a ocho miembros de la Junta Directiva y elegir a sus propios candidatos, potencialmente obteniendo el control total de la Junta. La Junta de Southwest considera que esta solicitud es innecesaria y disruptiva para los esfuerzos de transformación empresarial en curso.
La Junta ha intentado llegar a una resolución, ofreciendo nombrar hasta tres de los candidatos de Elliott en una Junta reconstituyente. Sin embargo, Elliott exige control efectivo tanto de la Junta como de la gestión. Southwest critica la falta de retroalimentación sustantiva por parte de Elliott sobre el plan estratégico de la empresa y cuestiona sus verdaderas intenciones.
Southwest reitera las acciones recientes tomadas, incluyendo una renovación integral de la Junta, cambios en la gobernanza corporativa e implementación de un plan de transformación de tres años destinado a impulsar el crecimiento de ingresos y restaurar una rentabilidad líder en la industria. Se espera que el plan aporte aproximadamente 4 mil millones de dólares en contribución acumulativa incremental de EBIT para 2027.
사우스웨스트 항공 (NYSE: LUV)은 엘리엇 투자 관리의 주주 특별 회의 요청에 응답했습니다. 엘리엇은 이사회 구성원 8명을 해임하고 자신들의 후보를 선출해 전체 이사회 통제권을 얻으려 하고 있습니다. 사우스웨스트 이사회는 이 요청이 불필요하며 사업 변혁 노력에 방해가 된다고 판단합니다.
이사회는 해결책을 찾으려 하였으며, 재구성된 이사회에 엘리엇의 후보 중 최소 3명을 임명하는 것을 제안했습니다. 그러나 엘리엇은 이사회와 경영진 모두에 대한 실제 통제를 요구하고 있습니다. 사우스웨스트는 엘리엇이 회사의 전략적 계획에 대한 실질적인 피드백을 제공하지 않은 점을 비판합니다.
사우스웨스트는 최근 취한 조치들을 강조하며, 종합적인 이사회 개편, 기업 거버넌스 변화 및 수익 성장과 업계 선두의 수익성을 회복하기 위한 3년간의 변혁 계획 이행을 포함합니다. 이 계획은 2027년까지 약 40억 달러의 누적 추가 EBIT 기여를 제공할 것으로 예상됩니다.
Southwest Airlines (NYSE: LUV) a répondu à la demande d'Elliott Investment Management pour une Assemblée Générale Spéciale des Actionnaires. Elliott cherche à faire révoquer huit membres du Conseil d'Administration et à élire ses propres candidats, obtenant ainsi potentiellement le contrôle total du Conseil. Le Conseil de Southwest juge cette demande inutile et perturbante pour les efforts de transformation en cours.
Le Conseil a tenté de parvenir à une résolution, proposant de nommer jusqu'à trois candidats d'Elliott dans un Conseil réformé. Cependant, Elliott exige un contrôle effectif à la fois du Conseil et de la direction. Southwest critique le manque de retour substantiel d'Elliott sur le plan stratégique de l'entreprise et questionne ses véritables intentions.
Southwest réitère les actions récentes entreprises, y compris le renouvellement complet du Conseil, les changements dans la gouvernance d'entreprise et la mise en œuvre d'un plan de transformation sur trois ans visant à stimuler la croissance des revenus et à restaurer une rentabilité de leader de l'industrie. Ce plan devrait générer environ 4 milliards de dollars de contribution cumulative substantielle au résultat EBIT d'ici 2027.
Southwest Airlines (NYSE: LUV) hat auf die Anfrage von Elliott Investment Management nach einer Sonderversammlung der Aktionäre reagiert. Elliott beabsichtigt, acht Mitglieder des Aufsichtsrats abzuberufen und eigene Kandidaten zu wählen, um potenziell die volle Kontrolle über den Aufsichtsrat zu erlangen. Der Aufsichtsrat von Southwest hält diese Anfrage für unnötig und störend für die laufenden Transformationsbemühungen des Unternehmens.
Der Aufsichtsrat hat versucht, eine Lösung zu finden und angeboten, bis zu drei Kandidaten von Elliott in einen neu zusammengesetzten Aufsichtsrat zu berufen. Elliott hingegen verlangt effektive Kontrolle über sowohl den Aufsichtsrat als auch das Management. Southwest kritisiert die mangelnde substanzielle Rückmeldung von Elliott zu dem strategischen Plan des Unternehmens und stellt dessen wahre Absichten infrage.
Southwest bekräftigt die jüngsten Maßnahmen, darunter eine umfassende Erneuerung des Aufsichtsrats, Änderungen in der Unternehmensführung und die Umsetzung eines dreißigjährigen Transformationsplans, der darauf abzielt, das Umsatzwachstum voranzutreiben und die branchenführende Rentabilität wiederherzustellen. Der Plan soll bis 2027 einen kumulierten zusätzlichen EBIT-Beitrag von ungefähr 4 Milliarden US-Dollar liefern.
- Implementation of a three-year transformational plan expected to deliver $4 billion in cumulative incremental run rate EBIT contribution by 2027
- Target to achieve ROIC of 15 percent or greater in 2027
- Comprehensive Board refreshment reducing average Board tenure from 6.8 to approximately 2.5 years
- Appointment of three new Directors with significant airline industry experience
- Ongoing dispute with major shareholder Elliott Investment Management
- Potential disruption to business transformation efforts due to Elliott's demands
- Failure to reach a constructive resolution with Elliott despite attempts at compromise
Insights
- Reiterates Efforts to Reach Constructive Resolution with Elliott
- Outlines Actionable Steps Taken to Position Southwest for the Future
- Shareholders Not Required to Take Immediate Action
Elliott's Special Meeting request is unnecessary and inappropriate considering the extreme nature of Elliott's demands. The timing of Elliott's request to apparently pursue Board control appears designed to maximize disruption of Southwest's execution of its important business transformation underway as we approach one of the busiest travel periods of the year. Elliott's actions highlight its lack of understanding of Southwest's business and its insatiable need to put its own interests ahead of those of all Shareholders. Before and since Elliott launched its campaign in June, the Board has had extensive dialogue with a significant number of Southwest Shareholders. The Board's actions have been rooted in feedback from these conversations, including the comprehensive Board and governance changes recently announced.
Southwest also heard Shareholders' resounding preference that the Company engage with Elliott and seek to avoid a protracted dispute. The Board has made every effort to reach a constructive resolution, including providing a reasonable settlement framework under which the Board would interview Elliott's candidates and appoint up to three to a reconstituted 13-member Board that would be reduced to 12 following Executive Chairman Gary Kelly's retirement at the 2025 Annual Meeting of Shareholders. For Elliott's part, its latest framework for settlement reflects its continuing interest in seeking effective control of both the Board and management, including by installing Robert Milton, former CEO of Air Canada and a member of Elliott's Board slate, as Executive Chair of Southwest.
Unfortunately, Elliott remains entrenched in demanding control of the Board, while continuing to block its Director candidates from being interviewed by the Board's Nominating and Corporate Governance Committee, making it impossible to find a constructive resolution. For nearly four months, Elliott has failed to offer any substantive feedback on Southwest's strategic plan. The Company was encouraged that Elliott might be turning the page ahead of Investor Day, when it requested a preview of Southwest's Investor Day materials as a condition to engaging in settlement discussions. After providing Elliott a detailed, in-person preview of the Company's plan more than a week before Investor Day, Elliott failed to provide input and continued its public attacks ahead of and following Investor Day.
Elliott's failure to provide actionable feedback, coupled with the disruptive nature of its demands, should give Shareholders pause about Elliott's true intentions.
The Board will carefully review the Special Meeting request in accordance with its fiduciary duties,
Southwest will continue to move expeditiously to transform its business, improve financial performance and make meaningful Board and corporate governance changes. The Board reiterated the following steps that Southwest has taken in recent months:
Comprehensive Board Refreshment and Corporate Governance Changes
Southwest recently announced the next phase of its Board transformation, which includes: six Director retirements effective immediately following the Company's regularly scheduled fourth quarter Board meeting in November and Executive Chairman Kelly's retirement effective immediately following the 2025 Annual Meeting; the anticipated appointment of three new Directors; the naming of new Committee Chairs and a new Lead Director; and significant corporate governance changes, including the elimination of the Executive Committee structure and creation of a new Finance Committee.
The Board has advanced its commitment to refreshment and a strong skill composition with the recent appointments of Robert Fornaro, former CEO of Spirit Airlines and AirTran Holdings Inc., Rakesh Gangwal, co-founder of
"Southwest. Even Better." Transformational Plan
Southwest is implementing a comprehensive three-year plan designed to drive revenue growth and return the airline to industry leading profitability. The Company's tactical and strategic initiatives are guided by data-driven research of travelers' changing preferences to transform the airline and are expected to deliver:
- Approximately
$4 billion - ROIC of 15 percent or greater, well above WACC in 2027
- Approximately
The Board strongly believes Bob Jordan is the right leader to successfully execute Southwest's plan and Leadership change amid such a significant transformation would be detrimental to all Shareholders. The Board has high expectations for
BofA Securities, Inc. and Morgan Stanley & Co. LLC are acting as financial advisors to Southwest and Vinson & Elkins L.L.P. and Kirkland & Ellis LLP are acting as legal advisors.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Specific forward-looking statements include, without limitation, statements related to (i) the timing and process and other matters with respect to the Special Meeting; (ii) the Company's initiatives, strategic priorities and focus areas, plans, goals, and opportunities, including with respect to (a) transforming its business, (b) improving financial performance, (c) making meaningful Board and corporate governance changes, (d) driving revenue growth, and (e) returning the airline to industry-leading profitability; (iii) the Company's financial and operational outlook, expectations, goals, plans, strategies, and projected results of operations, including with respect to its initiatives, and including factors and assumptions underlying the Company's expectations and projections; and (iv) the Company's expectations with respect to its Leadership team. These forward-looking statements are based on the Company's current estimates, intentions, beliefs, expectations, goals, strategies, and projections for the future and are not guarantees of future performance. Forward-looking statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the impact of fears or actual outbreaks of diseases, extreme or severe weather and natural disasters, actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions, and consolidation and alliance activities), consumer perception, economic conditions, fuel prices, banking conditions, fears or actual acts of terrorism or war, sociodemographic trends, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (ii) the Company's ability to timely and effectively implement, transition, operate, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives, including with respect to revenue management and assigned and premium seating; (iii) the cost and effects of the actions of activist shareholders; (iv) the Company's ability to obtain and maintain adequate infrastructure and equipment to support its operations and initiatives; (v) the Company's dependence on The Boeing Company ("Boeing") and Boeing suppliers with respect to the Company's aircraft deliveries, Boeing MAX 7 aircraft certifications, fleet and capacity plans, operations, maintenance, strategies, and goals; (vi) the Company's dependence on the Federal Aviation Administration with respect to safety approvals for the new cabin layout and the certification of the Boeing MAX 7 aircraft; (vii) the Company's dependence on other third parties, in particular with respect to its technology plans, its plans and expectations related to revenue management, operational reliability, fuel supply, maintenance, and Global Distribution Systems, and the impact on the Company's operations and results of operations of any third party delays or nonperformance; (viii) the Company's ability to timely and effectively prioritize its initiatives and focus areas and related expenditures; (ix) the impact of labor matters on the Company's business decisions, plans, strategies, and results; (x) the impact of governmental regulations and other governmental actions on the Company's business plans, results, and operations; (xi) the Company's dependence on its workforce, including its ability to employ and retain sufficient numbers of qualified Employees with appropriate skills and expertise to effectively and efficiently maintain its operations and execute the Company's plans, strategies, and initiatives; (xii) the emergence of additional costs or effects associated with the cancelled flights in December 2022, including litigation, government investigation and actions, and internal actions; and (xiii) other factors, as described in the Company's filings with the Securities and Exchange Commission ("SEC"), including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024.
ABOUT SOUTHWEST AIRLINES CO.
Southwest Airlines Co. operates one of the world's most admired and awarded airlines, offering its one-of-a-kind value and Hospitality at 117 airports across 11 countries. Southwest took flight in 1971 to democratize the sky through friendly, reliable, and low-cost air travel and now carries more air travelers flying nonstop within the United States than any other airline2. Based in Dallas and famous for an Employee-first corporate Culture, Southwest maintains an unprecedented record of no involuntary furloughs or layoffs in its history. By empowering its more than 74,0003 People to deliver unparalleled Hospitality, the maverick airline cherishes a passionate loyalty among more than 137 million Customers carried in 2023. That formula for success brought industry-leading prosperity and 47 consecutive years4 of profitability for Southwest Shareholders (NYSE: LUV). Southwest leverages a unique legacy and mission to serve communities around the world including harnessing the power of its People and Purpose to put communities at the Heart of its success. Learn more by visiting Southwest.com/citizenship. As the airline with Heart, Southwest has set a goal to work toward achieving net zero carbon emissions by 20505. Southwest has also set near-term targets and a three-pillar strategy to achieve its environmental goals. Learn more by visiting Southwest.com/planet.
1 Estimated cumulative run rate EBIT contribution to the Company's 2027 base business financial performance from its portfolio of initiatives included in its comprehensive three-year financial plan.
2 Based on
3 Fulltime-equivalent active Employees
4 1973-2019 annual profitability
5 Our net zero by 2050 goal includes Scope 1, Scope 2, and Scope 3 Category 3 emissions only and excludes any emissions associated with non-fuel products and services, such as inflight service items.
Important Additional Information
The Company intends to file a proxy statement and a WHITE proxy card with the SEC in connection with the solicitation of proxies for the Company's special meeting of Shareholders (the "Special Meeting"). SHAREHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ SUCH PROXY STATEMENT, ACCOMPANYING WHITE PROXY CARD AND ALL OTHER DOCUMENTS FILED WITH, OR FURNISHED TO, THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE SPECIAL MEETING. Shareholders will be able to obtain the Company's proxy statement, any amendments or supplements to the proxy statement and other documents filed by the Company with the SEC at no charge at the SEC's website at www.sec.gov. Copies will also be available at no charge at the Company's website at https://www.southwestairlinesinvestorrelations.com/financials/sec-filings.
Participant Information
The Company, each of its Directors (namely, Gary C. Kelly, Robert E. Jordan, William H.
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SOURCE Southwest Airlines Co.
FAQ
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