Since the summer of 2024, Southwest Airlines (LUV) has been engaged in a drawn-out proxy battle with its main investor.
After buying enough company stock to be able to call shareholder meetings, hedge fund Elliot Investment Management has repeatedly called for the ouster of CEO Bob Jordan over what it sees as “poor execution and leadership’s stubborn unwillingness to evolve.”
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Southwest guts 15% of its workforce, exec behind premium seating change
So far, Jordan has hung onto his role, but Southwest has taken several radical steps to appease shareholders. Most recently, the Dallas-based budget airline announced that it would lay off 15% of its corporate workforce, including senior leadership like EVP and Chief Transformation Officer Ryan Green.
The airline had already announced that former board chairman Gary Kelly would take early retirement last October. The board was shaken up with six new candidates of Elliott’s choosing, including former Ryanair (RYAOF) CEO Michael Cawley. On Feb. 10, the airline also announced that Tom Doxey was chosen as the new CFO.
Related: I just flew Southwest for the first time ever — here is what it was like
Green has worked with Southwest for the last 23 years, rising from the role of a marketing manager beginning in the mid-2000s. Green was behind the decision to scrap the decades-old seating model with which Southwest became associated to one of assigned seats.
This was a desperate move to bring back revenue that in some quarters was dropping by as much as 45%. While at the time Southwest said that over 80% of its customers “prefer an assigned seat,” the choice proved to be unpopular as being able to choose from any available seat after boarding had earned the airline much of its customer loyalty.
Green had become a more visible representative of the company during its transformation phase but ultimately took the blame when finances were not improving as fast as Elliott and other investors would have liked. Fourth-quarter revenue of $6.93 billion was a $6.93 billion was a 1.6% increase from the previous year.
“It’s been the ride of a lifetime to have the privilege of working for one of America’s Most Admired Companies [as ranked by Fortune’s prestigious list] for more than 20 years,” Green wrote on his LinkedIn profile.
Southwest speaks of ‘maximizing efficiencies and minimizing costs’
Other decisions made during that period of last-hour efforts included the introduction of red-eye flights. Southwest announced Green’s departure in a separate regulatory filing; he will formally leave the company on April 1 while the layoffs also included 11 other senior members of Southwest staff.
The drastic cuts are all part of an effort to placate Elliott and preserve Jordan’s role as chief executive. Other concessions include allowing them to purchase 19.99% of the company’s stock — up from the previous 14.99% — and reducing its board from 15 to 13 people.
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“As we continue to work together to transform our Company, an area of intense focus will be maximizing efficiencies and minimizing costs,” Jordan said of the latest layoffs while also classifying it as a “very difficult and monumental shift.”
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