Elliott Investment Management has trimmed its stake in Southwest Airlines, an SEC filing revealed.
Southwest's prior activist investor has now cut its stake in the airline to 51.1 million shares, down to a 9.9% stake. This is below the 10% threshold that would allow for the investor to call for a special meeting.
The investor said in the filing that it reduced its economic exposure for portfolio management purposes, but intends to remain significant shareholders of Southwest with its “confidence” in the airline's future profitability.
“[Southwest's] execution of ongoing strategic initiatives will translate to greater profitability, accretive capital-allocation opportunities and shareholder value creation,” said Elliott.
The airline had reached an agreement with the activist investor in October last year after a contentious relationship since the investor acquired an approximate 11% stake in Southwest.
Elliott had pushed for leadership change in the airline, originally planning to nominate 10 members to Southwest’s board of 15 directors before nominating eight members. The agreement shows five of those nominees being appointed to the board – avoiding an impending board battle after the investor called for a special meeting to be held in December last year.
Elliott withdrew its request to call a special meeting and decided it no longer intended to nominate candidates to stand for election to the airline's board. As part of the agreement, Southwest appointed five of Elliott's original nominees to the board.
In February this year, the two parties had amended their agreement.
The amended cooperation agreement includes the investor's maximum economic exposure it may acquire from 14.9% to 19.9%. The airline said that the agreement maintains restrictions on Elliott's beneficial ownership of 12.49% until April 1, 2026.