Company executives are facing pressure from activist investor Elliott Management, and Mr. Kelly was previously expected to leave within the next year.
DALLAS – Dallas-based Southwest Airlines announced Thursday that Executive Chairman Gary Kelly, the airline’s former CEO, will “accelerate his retirement” and resign next week.
The company also announced the appointment of six new board members in what Kelly called a “joint resolution” with activist investor Elliott Management, which has been pushing for major changes at the company in recent months.
Mr Kelly was previously expected to retire within the next year. Instead, Mr. Kelly’s retirement will take effect from November 1.
Southwest CEO Bob Jordan, also under pressure from Mr. Elliott, will remain in his role leading the company.
Earlier this year, Elliott passed the 10% ownership threshold, giving him more say in the running of the company and its board.
Kelly on Thursday called the move a “joint resolution with Elliott to continue to renew the board with the addition of new directors who bring complementary skills and experience.”
Elliott partner John Pike and portfolio manager Bobby Hsu said in a joint statement: “We are pleased to have reached an agreement with Southwest to add six new directors to strengthen and energize the Board of Directors. They are all highly qualified and under the leadership of our new Chairman, He brings diverse skills and backgrounds to the task of overseeing Southwest.”
The new directors are:
Pierre Barber: Former Chevron Vice President and Chief Financial Officer David Kush: Former Virgin America CEO Sarah Feinberg: Former Federal Railroad Administration Administrator Dave Grissen: Former Marriott International Group President Greg Saretzky : Former WestJet CEO Patricia Watson : Chief Information Technology Officer NCR Atreos
Learn more about their background here.
The move was announced as part of Southwest Airlines’ third quarter earnings report.
Southwest Airlines’ third-quarter revenue was a record high, but profits fell by nearly two-thirds to $67 million due to higher payroll and other expenses.
The company, which has been under pressure from Elliott to boost profits, announced Thursday that adjusted earnings beat Wall Street expectations.
Southwest Airlines also said it would accelerate $250 million worth of stock buybacks, building on a $2.5 billion stock buyback plan announced last month.
Jordan said the profit, although down from $193 million in the year-ago period, shows the company’s turnaround plan is starting to work. Southwest Airlines curbed cost increases by offering voluntary furloughs and limiting hiring to address what it deemed overstaffing.
