More board seats, but no majority

Elliott Investment Management (Elliott) and Southwest Airlines The company is reportedly close to reaching an agreement to end its proxy dispute, which has so far culminated in the company calling a shareholder meeting to vote on eight of its proposed directors.

I'm looking for an agreement

A Bloomberg report citing people familiar with the matter said Elliott and Southwest Airlines are close to an agreement that would avoid a proxy fight for control of the company's board.

A deal could see Elliott have several of his people on the airline's board, but the airline and its appointed directors would retain a majority.

The report added that while the agreement could be made public as early as October 24, discussions may come to nothing.

Photo: Vincenzo Pace | Easy flying

An earlier report from Bloomberg said Southwest Airlines was trying to end its proxy dispute with Elliott, with both sides engaging in active discussions. At the time, Bloomberg said the activist investor had proposed electing some of his nominee directors to the airline's board.

When Elliott fulfilled its promise and called a shareholder meeting on October 14, the company proposed electing eight of its nominee directors to Southwest Airlines' board. The meeting is scheduled for December 10th.

When Elliott began his proxy fight against the airline's current leadership, the activist investor initially introduced 10 nominees, including former C-level executives at the airline.

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Exciting times at Southwest Airlines

Meanwhile, Southwest Airlines President and Chief Executive Officer (CEO) Bob Jordan said these are exciting times for the airline as it implements its “Southwest” concept. Even better.' plan when the airline reported its third-quarter results on Oct. 24.

Jordan and Gary Kelly, the current chairman and former CEO of Southwest Airlines, were Elliott's top targets, with the activist investor having repeatedly called for their removal.

“We are fully focused on executing on the robust tactical and strategic initiatives contained in our plan and returning to the strong financial performance we expect.” We are committed to executing on our plan and reporting regularly on our progress.”

Photo: Southwest Airlines

Jordan concluded that based on its current progress, prospects and confidence in the plan, Southwest Airlines intended to repurchase $250 million of its common stock through an accelerated stock repurchase program. This came as part of the $2.5 billion share repurchase authorization the airline announced in September.

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Increase in yield

Southwest Airlines ended the third quarter with revenue of $6.87 billion, and although operating expenses rose to $6.83 billion, the airline posted an operating profit of $38 million. Net income was $67 million, down 65.3% year over year.

“The company's record third quarter performance in both operating and passenger revenue was driven primarily by revenue improvements from capacity reductions across the industry and progress in managing tactical initiatives to drive results.”

Photo: Ian Dewar Photography | Shutterstock

Looking forward, Southwest Airlines said unit revenue is expected to increase 3.5% to 5.5% year-over-year, with capacity expected to decline about 4% year-over-year.

“This forecast range calls for a headwind of just under half a point

Hurricane Milton

and the resulting customer cancellations.”

Southwest Airlines concluded that travel demand has remained healthy so far in the fourth quarter and bookings for the holiday season have been strong so far.

Filings with the U.S. Securities and Exchange Commission (SEC) did not contain information about possible changes to the airline's board.

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