Elliott Management’s $1.9 billion stake in Southwest Airlines has raised concern among investors who value the company’s steadfast culture.
Since Elliott Management announced its $1.9 billion stake in Southwest Airlines in June, the stock is down slightly.
Elliott partner John Pike, who is now leading the Southwest campaign, was involved in the firm's actions at both energy companies. While Suncor and Marathon resisted Elliott's proposals, including leadership change and business reviews, Elliott still got much of what it wanted. Pike and portfolio manager Bobby Xu are leading Elliott's Southwest campaign. Elliott and Southwest representatives met in person in Dallas two weeks ago, according to people familiar with the matter. The discussions remain in the early stages, said the people, who asked not to be named because the conversations were private.Southwest shares are down slightly since Elliott announced its involvement, despite a 7% jump on the day of the disclosure. They fell 5.7% on Friday to close at $26.94.
Elliott first amassed a stake in the oil producer in 2016 and asked Marathon to"evaluate" breaking up the company. Like Suncor, Marathon ran a review and opted to stay intact, keeping its Speedway gas stations as part of the business. "While the Company assured shareholders that it was pursuing a full review of the Speedway business, it had a different agenda entirely," Elliott's Pike wroteCEO Gary Heminger would retire and that the company would finally spin off Speedway. Elliott reportedly insisted the board find an outsider to replace Heminger.Years after its victories at Marathon and Suncor, Elliott remains a top five shareholder at both companies., has expressed its support for Elliott's campaign.
Elliott, which has dealt with poison pills in the past, hasn't made clear where it plans to go with its campaign. The firm isn't currently pursuing specific changes that would affect things such as Southwest's baggage policy, according to a person familiar with its plans. Southwest is the only domestic carrier that allows every passenger to check two bags for free, a major customer perk, particularly for those who fly with family members.
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