• Activist investor Elliott Management said Tuesday it will call a special meeting at Southwest Airlines "as soon as next week."
• Southwest's shareholder meeting is typically scheduled for May, but by calling for a special meeting Elliott would be looking to elect new directors much sooner than that.
• The activist has put forward a 10-director slate comprised of airline executives and former regulators or government officials.

Elliott Management said Tuesday it will call a special meeting at Southwest Airlines "as soon as next week," shortly after the company put forward a sweeping board shake-up that it hoped might stave off a proxy fight.

The push comes days before the airline's investor meeting, where it is expected to unveil improvements and operating changes. Elliott is seeking to oust CEO Bob Jordan and Executive Chairman Gary Kelly, the latter of whom has already committed to stepping down in 2025. The activist has put forward a 10-director slate comprised of airline executives and former regulators or government officials.

"We believe that competent new leaders, working through a deliberate and thoughtful process, should chart the course forward for Southwest," Elliott partner John Pike and portfolio manager Bobby Xu said in a letter to shareholders.

"We do not support the Company's current course, which is being charted in a haphazard manner by a group of executives in full self-preservation mode," Pike and Xu wrote.

Southwest responded late Tuesday by reiterating its support for Jordan and criticizing Elliott's approach to change at the airline.

"Any Leadership change amid such a significant transformation would be detrimental to all
Shareholders, and handing control of the Board to Elliott and its Director candidates – when Elliott has not articulated any ideas for improving Southwest's business plan and operations – would present a catastrophic risk to Shareholders," the carrier said.

Southwest's shareholder meeting is typically scheduled for May, but by calling for a special meeting Elliott is looking to elect new directors much sooner than that. It takes a few months for both sides to solicit shareholder support, and a settlement is always possible in the interim.

Elliott said Southwest's advisors were maneuvering to limit the number of shareholders eligible to vote, via something known as a "false record date."

Southwest Airlines in July unveiled major changes to its more than 50-year-old business model: It will soon ditch open seating for assigned seats, offer seats with more legroom that command higher fares and start operating red-eye flights. Last week, COO Andrew Watterson warned staff to brace for more "difficult decisions" in its push to restore profits as the airline faces rising costs and shifting travel patterns.

The company isn't planning to furlough workers but it could cut its presence in certain cities and give workers the chance to transfer to other bases, according to a person familiar with the matter.

Southwest will release a routine schedule update on Wednesday that will show its flights through early June. Earlier this month, Kelly, who served as Southwest's CEO before handing the reins to Jordan in early 2022, said he would step down after the carrier's shareholder meeting next spring.

The Aircraft Mechanics Fraternal Association, which represents Southwest's mechanics and met with Elliott, said last week the activist investor made "clear that its vision of a Southwest turnaround is one where Robert Jordan does not remain as CEO, and if Elliott can assert enough Board influence, other top executives would also, most likely, be replaced."

"The need for change is urgent, and our request for a special meeting may come as soon as next week," Pike and Xu said.