Southwest appoints former US Airways CEO to its board amidst ongoing battle with activist investors.
- In an effort to fend off activist Elliott Management, Southwest appointed a new board director.
- The airline appointed Rakesh Gangwal, a seasoned airline executive and founder, to its board just days after implementing a "poison pill" to prevent Elliott from increasing its 11% economic stake.
- Gary Kelly and Bob Jordan are being targeted for removal by Elliott, who claims that the airline's culture of innovation has been lost, leading to a decline in profitability and success.
On Monday, it was announced that Rakesh Gangwal, the former CEO of US Airways, would be joining the board of directors of the company. This move comes as the company attempts to resist an activist campaign led by Elliott Management.
Southwest's board is being criticized for being long-tenured and insular, and the latest defensive maneuver is aimed at refuting these accusations. The two sides have been in conversation since Elliott first announced its 11% economic interest in the airline in June.
IndiGo, founded by Gangwal in 2006, has since grown into the largest airline in Asia, with over 106 million passengers in fiscal year 2024.
Southwest announced the board expansion less than a week after adopting a shareholder rights plan, which restricted investors' ability to increase their stakes beyond a 12.5% limit.
Gary Kelly, Southwest executive chairman, expressed delight in welcoming Rakesh to the Board, who has extensive experience as an executive and entrepreneur at top airlines worldwide.
Southwest's CEO, Kelly, and Bob Jordan, who has been CEO since 2022, are being targeted for removal by activist investment firm Elliott, who believes leadership change is necessary to restore a culture of innovation at the company. The firm has criticized Kelly and Jordan for their role in the company's declining margin and share price compared to peers.
Southwest will provide further updates during its investor day in September, but an Elliott spokesperson did not respond to a request for comment.
Technology
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