(Bloomberg) -- Elliott Investment Management still wants to replace Southwest Airlines Co. Chief Executive Officer Bob Jordan, according to a union official, suggesting changes the carrier has already promised aren’t enough to satisfy the activist shareholder.
In a Sept. 12 meeting with the Aircraft Mechanics Fraternal Association, Elliott detailed plans for Southwest without Jordan as its leader, union National President Bret Oestreich said in a memo to members. The investment firm, which is seeking a shakeup after acquiring a 10% stake in the carrier, also wants Southwest Chairman Gary Kelly to exit sooner than his planned retirement next year.
Elliott was “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,” Oestreich said in the Sept. 16 letter. AMFA represents more than 3,200 mechanics and other workers at Dallas-based Southwest.
The airline said in a statement that it welcomes “opportunities to discuss ideas that would drive sustained shareholder value.” Southwest, whose board has stood by Jordan after prior calls by Elliott for his ouster, noted that it would discuss details of its ongoing transformation at an investor day on Sept. 26.
The investment firm, which disclosed a $1.9 billion stake in the carrier in June, declined to comment.
The exchange with the union shows that tensions aren’t easing between the investor and the airline, after Elliott criticized Southwest for what it called a stubborn refusal to modernize operations. The lack of change has cost the carrier some passengers and hurt investors with a lagging share value, Elliott has said. In addition to calling for the departure of the top executives, the activist has named 10 potential new board members for Southwest.
The union meeting came days after Southwest revealed sweeping changes to its board, with Kelly planning to step down and six other directors departing this year. Those moves, Elliott told the union group, weren’t part of a negotiated deal between the two sides.
Southwest has also announced a series of operational changes, including adopting assigned seating after more than a half-century and adding a new premium section onboard aircraft.
The union said it was considering additional meetings with Elliott, including possible talks with a consultant hired by the investor about labor relations at the carrier. Elliott also has met with Southwest’s pilots union.
(Updates with Southwest response in fourth paragraph.)
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