An investment firm that holds around 11% of Southwest Airlines wants to dispose of chairman Gary Kelly and CEO Bob Jordan, calling their leadership “not up to the task of modernizing” the airline.

An investment firm holding a $1.9 billion stake in Southwest Airlines is campaigning for new leadership, claiming the current combination of board chairman Gary Kelly and chief executive Bob Jordan are not capable of modernizing the airline.

In an open letter, leaders from Elliott Investment Management are calling on the Southwest board of directors to upgrade the company’s leadership and ultimately go through a business review to determine how to better improve performance metrics.

Elliott Accuses Southwest of Underperformance From Kelly and Jordan

In the letter, the leadership at Elliott say their research leads them to believe that “Southwest represents the most compelling airline turnaround opportunity in the last two decades.” However, in order to achieve that potential, it is their opinion that a change in leadership is needed.

Citing the 2022 operational meltdown that left thousands of flyers stranded across the United States and “negative guidance revisions” after quarterly reports, the activist investor is calling for a new board of directors that does not include emeritus CEO Gary Kelly or current airline head Bob Jordan.

“Southwest’s Executive Chairman and its CEO, who have spent a combined 74 years at the Company, have presided over a period of severe underperformance, and they have demonstrated that they are not up to the task of modernizing Southwest,” the letter reads. “We believe that new leadership is required at Southwest.”

The letter notes that the current board is made up of directors that have no external airline experience and were reportedly recruited by board chairman Kelly. In order to turnaround the airline, Elliott is calling for the carrier to clean house on the board and recruit directors “who have best-in-class expertise in airlines, customer experience and technology,” as well as “bring in new leadership from outside the company to improve operational execution and lead the evolution of Southwest’s strategy.” If the airline follow’s Elloitt’s advice, the investment company says they can increase the airline’s share price to $49 per share in the next 12 months.

“Today, Southwest’s failure to execute and evolve has led to deteriorating performance, and the Company simply is not living up to its legacy of efficiency and top-tier results,” the letter concludes. “Nevertheless, we are convinced the issues the Company currently faces are addressable with the right leadership and a comprehensive, unbiased evaluation of the available opportunities.”

In a statement to the Associated Press, a Southwest spokesperson said: “The Southwest Board of Directors is confident in our CEO and management’s ability to execute against the company’s strategic plan to drive long-term value for all shareholders, safely and reliably serve our customers and deliver on our commitments to all of our stakeholders.”

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