DALLAS– The CEO of Southwest Airlines said Wednesday he will not resign in the face of pressure from a hedge fund that wants him fired and that his leadership team will produce its own plan to improve the airline’s financial performance.
Chief Executive Officer Robert Jordan said Southwest will present its plan in September. He declined to give specifics, but again hinted that it could include changes in the airline’s longstanding boarding and seating policies.
Elliott Investment Management notified Southwest’s board Monday that it bought a $1.9 billion stake in the Dallas-based company and is seeking to replace Jordan and Gary Kelly, the airline’s chairman and former CEO, with executives from outside the company.
Elliott accused Southwest leadership of failing to change with evolving customer tastes, causing it to lag behind rivals. The hedge fund noted that Southwest’s share price has fallen more than 50% over the past three years.
Another investment manager, Artisan Partners, said Wednesday that it has raised the same issues with Southwest, and it urged the airline’s board of directors to “upgrade the company’s leadership.”
Speaking to reporters in Washington, Jordan said, “I have no plans to resign” and that Southwest will treat Elliott “like any other investor.”
“Elliott can provide us ideas … but Elliott is not directing the company,” he said.
