Elliott Investment Management and Southwest Airlines Co. in discussing a potential settlement that would avoid a proxy battle for control of the airline’s board, according to people familiar with the matter.
Elliott proposed a framework that would give her representation on Southwest’s board but not control, said some of the people, who asked to remain anonymous because the discussions are not public. The sources said the talks, which were progressing toward a solution as of Saturday, had not been concluded and may fail.
Representatives for Southwest and Elliott declined to comment.
Elliot has nominated Eight directors have joined Southwest’s board and called a special shareholder meeting on December 10, to decide what will be the company’s first US proxy fight since 2017.
In response, Southwest said its board made every effort to reach a constructive resolution with Elliott, including providing a settlement framework to appoint up to three activist nominees. She said Elliott’s request for a special meeting was unnecessary and inappropriate.
Elliott, based in New York, disclosed an initial stake in Southwest worth nearly $2 billion in June. She called for changes in strategy and leadership at the carrier after what she saw as years of poor performance, pointing the finger squarely at CEO Bob Jordan and Chairman Gary Kelly.
Last month, the airline revealed the amount of $2.5 billion Stock buyback plan It details key policy changes as part of plans to revitalize operations and push back against Elliott. The airline will start selling assigned seats late next year and will offer a premium fare option that provides extra legroom.
These changes break with the principles that have helped set Southwest apart for decades, after the carrier was slow to embrace industry pushes to meet growing demand for premium flight options. The Dallas-based carrier will maintain its policy of two free checked bags.