Activist investment firm Elliott Investment Management has taken an 11 percent stake in Southwest Airlines, worth about $1.9 billion, and is calling for a management shakeup to overcome what the investors called“unacceptable financial and operational performance” and revive the carrier’s lagging stock price.

In a letter to the Southwest board of directors, Elliott singled out CEO Bob Jordan and executive chairman Gary Kelly, the airline’s former CEO, claiming the leadership was “not up to the task of modernizing Southwest.” The letter pointed out that the airline’s stock price has dropped more than 50 percent in the last three years.

After the news broke, the airline’s stock posted a 7 percent gain Monday, the second-best showing since 2020.

In the letter, the investment firm said the company suffered with “poor execution” and an “unwillingness to evolve” its strategy, which has hindered its competitiveness relative to other carriers. Elliott pointed to the carrier’s massive flight cancellations in December 2022, blaming “outdated software and operational processes.”

The investment firm is calling for Jordan and Kelly to be replaced by executives from outside the company, and bringing in new independent board members who have experience at other airlines.

In a statement, the airline said, “The Southwest Board of Directors is confident in our CEO and management’s ability to execute against the company’s strategic plan.” The airline said it was in contact with Elliott and looked forward “to better understanding their views on our company.”

Elliott Investment Management is known for taking activist positions to generate change within companies to boost shareholder returns. According to the firm, a comprehensive business review can help Southwest’s stock hit $49 per share within 12 months. Currently, Southwest stock is trading at around $28 per share. 

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