Southwest and Elliott reach agreement to retain Bob Jordan as CEO, appoint six new directors.

• A proxy fight has been avoided through a settlement deal between Southwest Airlines and activist investor Elliott Investment Management, which was announced on Thursday.
• The airline's board will have six new directors, and Gary Kelly, the executive chairman, will retire sooner.
• Southwest CEO Bob Jordan will keep the top job.

Elliott Investment Management has reached a settlement agreement with American Airlines that prevents a proxy fight, adds six directors to the airline's board, and accelerates the retirement of executive chairman Gary Kelly, while allowing CEO Bob Jordan to remain in his position.

Five of Elliott's nominees and former Chevron CFO Pierre Breber will join the board, while Southwest will appoint a new chairman in November to replace Kelly. Breber is also on the board at Avianca, the Colombian flag carrier.

An agreement has been reached with Southwest to add six new directors to its Board, which will bring about a revitalization and enhancement of the Board, as stated by John Pike and Bobby Xu of Elliott.

Recently, Elliott and Southwest had been preparing for a proxy fight, with the activist seeking to install 10 new directors to the carrier's board and calling for a special meeting in December to elect them. Elliott's campaign primarily focused on removing Kelly and Jordan from their leadership positions.

In March, Southwest announced that Kelly would resign, despite the airline's board strongly supporting Jordan.

Kelly stated in a release on Thursday that he believes Southwest's best days are yet to come under the leadership of Bob Jordan and the supervision of the restructured Board,

— CNBC's Leslie Josephs contributed to this report.