Southwest Airlines In Settlement Talks With Activist Investor Elliott Management To Avoid Proxy Fight For Board Control: Report

Elliott Investment Management and Southwest Airlines (NYSE:LUV) have begun discussing a potential settlement that could avoid a proxy fight for control of the airline company’s board.

What Happened: Elliott has proposed a plan that involves giving it representation on the airline’s board without control, Bloomberg reported on Saturday, citing people familiar with the matter.

The report added that the talks are progressing towards a resolution. However, they haven’t been finalized and could also be unsuccessful, it said.

Benzinga has reached out to both Southwest and Elliott for confirmation but is yet to receive a response.

Why It Matters: Earlier this week, Elliott Investment Management asked for a special meeting of Southwest shareholders for Dec. 10 and submitted a proposal to replace eight directors on the struggling airline's board.

Elliott has made several attempts to persuade Southwest to implement what it sees as "necessary" governance changes to improve financial performance since June. The hedge fund said it currently maintains nearly 11% stake in the airline.

"We are taking this step today because the need for improved oversight at Southwest has never been more urgent," the activist investor said earlier this week while adding that the company needs an experienced and qualified Board to oversee changes.

However, Southwest then termed the special meeting request as “unnecessary and inappropriate” and termed the hedge fund’s demands as “extreme.”

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