With the addition of the co-founder of IndiGo to the Southwest Airlines Board of Directors, Elliott Investment Management is willing to start a proxy fight and take their case to the company’s shareholders.

Elloitt Investment Management is preparing to scale up their pressure on Southwest Airlines by taking on an increased stake and forcing a special meeting of the board to potentially vote on new directors.

The management firm made their direction clear in a new letter to the Southwest board, as well as their new website pleading to investors at StongerSouthwest.com.

Elliott Warns They Will Work to “Give Shareholders a Direct Say” on Leadership

In the letter from Elliott signed by partner John Pike and portfolio manager Bobby Xu, the company says that they are open to working with Southwest towards resolving their issues with airline leadership. However, they also warned they “intend to move expeditiously to give shareholders a direct say on the necessary leadership changes.”

Under Southwest’s board by-laws, a major shareholder can force a shareholder meeting to vote on topics affecting the company, such as board members. The letter suggests that Elliott has the evidence and support of other shareholders to make changes among the airline’s leadership.

Some of the quotes collected by the investment management company and attributed to “Top 10 Active Shareholders” include quips such as: “I have zero confidence this team can get this right and certainly not in the timeframe that is needed,” and “I don’t think this is the right CEO to lead the company and I would view his removal positively.” Elliott says they also talked to current employees, with one saying: “Not only do I have a vested interest in the success of the company (my SWA stock has lost over half of its value) but I have spent 50% of my life flying and working for a company that was once the envy of every other airline operating in the world. Without any doubt I agree that a new leadership team is needed.”

Elliott is still calling for their three points to be put into place in order to drive a “turnaround” for Southwest: Change certain board members, including former CEO and current chair Gary Kelly; remove current CEO Bob Jordan from his position; and complete a comprehensive business review to develop a new strategy.

To counter Elliott’s moves, Southwest initiated a “poison pill” move to counter any attempt by Elliott to increase their shares. The Associated Press reports the board will initiate a “shareholders rights plan” to offer current shareholders the right to purchase stock at a 50% discount if another shareholder gets more than a 12.5% stake in the company. The airline also appointed IndiGo co-founder Rakesh Gangwal to their board, bringing it to 15 members. Gangwal has previously been an executive at US Airways, Air France, and United Airlines.

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