Elliott Investment Management called for new leadership at Southwest Airlines Co. and an overhaul of its business strategy after revealing a US$1.9 billion stake in the U.S. carrier.

The activist firm disclosed the investment Monday in a letter criticizing “Southwest’s poor execution and leadership’s stubborn unwillingness to evolve the company’s strategy.” Elliott specifically called out Southwest Chief Executive Officer Bob Jordan and Executive Chairman Gary Kelly for missteps that the firm said have hurt shareholders.

“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 investor said.

Southwest didn’t immediately respond to a request for comment.

Shares of Southwest jumped 8.2 per cent shortly after the markets opened in New York, the biggest intraday gain since March 2022. The stock had gained late Sunday after the Wall Street Journal reported that Elliott had taken a stake and planned to engage with management.

The size of the holding would make the activist firm one of the largest investors in Dallas-based Southwest, which has a market capitalization of about $17.9 billion.

The airline has struggled to capitalize on travel demand coming out of the pandemic, burdened by high costs and constraints on its growth that have led to stock declines in each of the past four years. Southwest, which flies only Boeing Co. 737s, has been particularly affected by delayed aircraft deliveries as the planemaker struggles with production problems.

Southwest has already taken steps this year to reduce flight capacity, pull out of several airports and slow hiring. The carrier said in April it would “significantly restructure” other markets, including operations in Chicago and Atlanta.

That same month, Southwest reported an adjusted first-quarter loss of 36 cents a share, deeper than Wall Street had expected. Revenue also came in short of estimates.

The company’s reputation has also suffered from a significant flight disruption in late 2022 that stranded millions of passengers over the holidays.

More time won’t fix Southwest’s issues, according to a website set up by Elliott, citing a “complacent approach and lack of urgency to confront challenges.” Jordan’s comments on the carrier’s financial performance have been “disconnected from reality.”

Elliott said a turnaround at Southwest is “eminently achievable.” Change should begin “immediately,” allowing the airline to update investors on a go-forward strategy by year-end. The activist firm also called for changes to the board, including adding directors with external airline experience.

Led by Paul Singer, Elliott is one of the world’s most active boardroom agitators. The firm had already launched campaigns at companies with a combined market value of about $100 billion this year — including at U.K.-listed miner Anglo American Plc and Japanese trading house Sumitomo Corp.

The Southwest push comes shortly after another activist, investor Carl Icahn, took a stake in JetBlue Airways Corp. earlier this year. That carrier subsequently gave the shareholder two board seats.