Representatives of Southwest Airlines and Elliott Investment Management plan to meet on Sept. 9, both parties said on Monday.
But Elliott also said it will charge forward with a plan to initiate a proxy vote for its hand-selected slate of 10 board members unless the current board is willing to engage in a conversation about the removal of chairman Gary Kelly and CEO Bob Jordan.
"The reality is that we are eager to engage with Southwest's board on the urgent changes needed at the company. But we believe that so long as the jobs of Mr. Jordan and Mr. Kelly remain sacrosanct -- and they remain empowered to make every critical decision at the company without proper oversight from a board that has failed for years to hold them accountable -- it is preferable to give shareholders a direct say on the question of who should be leading Southwest," Elliott partner John Pike and portfolio manager Bobby Xu wrote in an open letter to Southwest shareholders on Monday.
Elliott has an 11% interest in Southwest, an investment valued at approximately $1.9 billion. The firm blames the airline's current leadership for declining margins in recent years relative to competitors United, Delta and American, as well as for a plunging share price, saying the carrier has been to slow to evolve in line with current consumer preferences.
Elliott also portrays the Southwest board as being beholden to Kelly and Jordan. The director slate put forward by Elliott on Aug. 14 includes six former airline executives, including former CEOs of Virgin Atlantic, Air Canada and Ryanair.
Southwest leadership has pushed forcefully against Elliott, including adopting a shareholder-rights provision last month, known in investment parlance as a poison pill, geared toward diluting the potential for Elliott to accumulate a larger ownership share in the company.
The Southwest board also added a new seat in July to include a member with experience at an airline other than Southwest.
In a move that appeared to have been in the works before Elliott came on the scene, Southwest in July revealed plans to add its first extra-legroom seats and to replace its open-seating policy with assigned seating.
"We welcome the opportunity to discuss ideas that would drive sustained shareholder value as we work to reach a collaborative resolution," Southwest said in a statement Monday. "Southwest has made multiple overtures to engage with Elliott, and we remain prepared to meet on Sept. 9. Southwest invites feedback and during the past several months, our board and leadership have met with many of our shareholders to hear from them directly."
The carrier added that it will share more details about its transformation plan at an investor event on Sept. 26.
In its open letter to shareholders, Elliott said that Kelly appears to be leading a process by the current board to add new directors and portrayed the initiative as an effort to entrench current leadership.
Southwest did not respond to a question about whether such a process is underway.