An activist hedge fund called Elliott Management has bought a $1.9 billion share in Southwest Airlines. The fund wants to change the leadership at the airline, which has been behind its big competitors.
FactSet says that Elliott is now one of Southwest’s biggest owners because of the share. Southwest stock was up 7% before the market opened on Monday.
As of Friday night, the market value of the company was $16.6 billion.
Southwest has had a hard time with delays at Boeing of new 737 Max planes, which are the newest models of the plane and the only ones that Southwest flies. They have also had trouble with changing travel habits since the pandemic.
In order to compete with other airlines that offer more services and goods, the airline’s leaders are now looking for new ways to make money. After working for the airline for decades, Bob Jordan became CEO of Southwest in February 2022. In April, he told CNBC that the company is thinking about getting rid of its single-class seats and long-standing boarding method.
The airline also had to deal with a holiday failure at the end of 2022 that cost it more than $1 billion. The airline, which has always been known for good customer service, had to quickly fix its internal staff scheduling software and win back passengers.
Southwest’s stock price has dropped more than 50% since three years ago, when people were starting to travel again, mostly for short trips within the United States. During that time, Delta Air Lines shares are up about 10%, while United Airlines shares are down about 7%.
Elliott’s efforts at other companies have also been about getting rid of the current leadership. Elliott’s second run for Crown Castle in 2022 and his settlement deal with Sensata, a company that makes parts for cars, earlier this year are just two examples.
The agitator has bought $2.5 billion worth of shares in Texas Instruments, $2 billion worth of shares in SoftBank, and $1 billion worth of shares in Anglo-American, all in the last few months.
Source: NBC News
