Elliott's 2024 campaign forced Southwest's first layoffs and a board overhaul

Southwest, long a low-cost favourite, entered 2024 with an operating margin near 0.2% versus more than 13% in 2019, passenger volumes below pre-pandemic levels, and shares down about 40% in three years. In June 2024 Elliott Investment Management revealed an 11% stake worth about $1.9 billion and publicly said new leadership was required, calling CEO Bob Jordan's performance 'unacceptable.'

Elliott blamed 'poor execution' and a 'stubborn unwillingness' to evolve Southwest's strategy, and said a comprehensive business review could lift the shares to $49 within a year. Under the pressure Southwest laid out its own three-year plan in September 2024, targeting about $4 billion of incremental EBIT, at least a 10% operating margin, 15% return on invested capital and over $1 billion of free cash flow by 2027.

In February 2025 Southwest announced its first broad layoffs in 53 years, cutting 1,750 corporate roles (15% of the workforce), and in late 2025 it settled the proxy fight by overhauling the board: Chairman Gary Kelly and six directors departed, replaced by five Elliott-backed candidates and a former Chevron executive. Elliott won most of its demands but did not oust Jordan and stopped short of majority control.

Southwest cut 1,750 corporate jobs, added five Elliott-backed directors, moved to assigned and extra-legroom seating, and targeted about $4B incremental EBIT by 2027.

Elliott's thesis was written in a 13D and public letters before any outcome was known.

An 11% stake made Elliott one of Southwest's largest holders, so management could not ignore it.

Elliott attacked costs, board composition and product rather than demanding the CEO go.

Southwest's own plan addressed the same items: costs, assigned seating and capacity discipline.

A written activist thesis can force an incumbent's turnaround even when the CEO stays: it changes the board, the cost base and the product rather than just the leader.

Elliott won several board seats in an October 2024 truce and a fuller settlement followed, with Gary Kelly and six board members leaving for five Elliott-backed directors and a former Chevron executive. Southwest moved toward assigned and extra-legroom seating, pursued international partnerships starting with Icelandair, and kept its cost-reduction plan, while third-quarter 2025 profit still fell to $67 million. The transformation was still being executed.