Shares of Southwest Airlines (LUV.US) fell 1.26% today following news that activist investor Elliott Investment Management has formally requested a special shareholder meeting, intensifying its push for significant changes at the airline.

 

Elliott, which has amassed an 11% stake in Southwest, is seeking to replace eight current board members with its own nominees. This move marks Elliott's first U.S. proxy fight since 2017 and its first-ever request for a special shareholder meeting since the firm's founding in 1977.

The activist investor has proposed a slate of eight director candidates, including industry veterans such as Michael Cawley, former deputy CEO of Ryanair, and David Cush, ex-CEO of Virgin America. Elliott has requested the special meeting take place on December 10, 2024.

This escalation comes despite Southwest's recent efforts to appease investors. In September, the airline announced the departure of six board members, including Chair Gary Kelly, and reduced its board size from 15 to 12 members. Southwest also unveiled plans to boost operating profit by $4 billion by 2027 and announced changes to its seating policy and international strategy.

However, Elliott maintains that these measures are insufficient. The firm has been critical of Southwest's leadership, particularly CEO Bob Jordan, citing years of underperformance compared to industry peers. Over the past three years, Southwest's shares have fallen approximately 40%, underperforming rivals like Delta Air Lines and United Airlines.

The market's negative reaction today suggests investors are concerned about the potential for a prolonged and disruptive board battle. There are also worries that the proxy fight could distract management from implementing necessary operational improvements and strategic initiatives. As the situation unfolds, investors will be closely watching for Southwest's response and any potential impact on the airline's operations and long-term strategy. The outcome of this proxy fight could have significant implications for Southwest's future direction and leadership.

The price is approaching 50% Fibonacci retracement support which was a strong level in both upward and downward movement. RSI is on edge of bearish divergence, with 52.9 level confirming the downtrend. MACD has given today a sell signal, which might give bears an advantage. For bulls key level is 61.8% Fibonacci retracement. Bulls will regain control if price stays for several trading days above $30.76. Otherwise, bears could be in charge. Source: xStation