Southwest Adds IndiGo Co-Founder to Board in Latest Line of Defense Against Elliott

Skift Take

Gangwal’s appointment comes after activist investor Elliott criticized the airline’s board for not having enough directors with external airline experience.

Southwest Airlines announced Monday it is adding longtime airline executive and IndiGo co-founder Rakesh Gangwal to its board of directors. 

The move appears to be the airline’s latest defense from hedge fund Elliott Investment Management, which took a $1.9 billion activist stake in the company. Elliott has previously criticized Southwest’s board for not having enough external airline experience. 

Gangwal was previously the CEO and chairman of U.S. Airways and held executive roles at United Airlines and Air France. He helped found IndiGo — a low-cost carrier that has become the biggest airline in India — in 2006. 

“I have long admired Southwest Airlines and am honored to join the Board,” Gangwal said in a statement. “Together with the rest of the Board, I look forward to supporting the Company’s strategic direction and building on its well-earned reputation as one of the world’s most admired and respected airlines.”

Southwest’s ‘Poison Pill’

Shortly before the announcement of Gangwal’s appointment, Southwest said it would adopt a shareholder rights plan, more commonly known as a “poison pill,” to prevent Elliott from acquiring a controlling stake in the company. 

The plan goes into effect if a shareholder acquires at least 12.5% of the company. If an investor has a controlling stake, then other shareholders have the opportunity to buy a Southwest share for every share they own at a 50% discount. The “poison pill” would dilute Elliott’s voting power if it were to acquire a majority stake in Southwest. 

The hedge fund has been advocating for Southwest CEO Bob Jordan and chairman Gary Kelly to resign, arguing that a leadership change would turn around the airline’s recent underperformance. So far, Southwest hasn’t been profitable in 2024 and the carrier recently lowered its outlook for the second quarter. 

Jordan said he doesn’t plan to resign. The CEO told analysts during an earnings call April 25 that executives are debating whether to add premium cabins and do away with open boarding to boost revenue.

Elliott did not immediately respond to a request for comment. 

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