Southwest has appointed Rakesh Gangwal, a co-founder of India's largest carrier IndiGo, to its board of directors.
The move appears to be a reaction to demands from the activist investor group Elliott Management, which had criticized Southwest for not having any board members with airline experience other than at Southwest.
Elliott, which has taken an 11% stake in Southwest, has also called for the removal of CEO Bob Jordan and chairman Gary Kelly.
In a statement Monday, Southwest said the appointment of Gangwal
continues its board's ongoing efforts to diversify its composition with
members who have a broad range of business skills. The board has now
appointed eight new independent directors over the last three years.
Jordan has said he won't resign, and the Southwest board has stated its support of current management.
IndiGo founder was CEO of US Airways, Worldspan
Along with founding IndiGo, Gangwal has been CEO of US Airways and the Worldspan GDS, which is now part of Travelport.
"Rakesh's expertise in travel technology will be valuable as we continue to make investments that support our operations and strategic initiatives," Kelly said in a statement.
Among the criticisms Elliott has leveled at Southwest is that its technology trails that of other leading U.S. airlines.
Elliott Management's response
In a statement Monday, Elliott made clear that it is not swayed by the appointment of Gangwal, calling the move a clear attempt by the board "to entrench itself and the current management team."
Elliott also commented on Southwest's decision last week to defend itself against a potential additional share buy-up by the company by adopting a one-year rights plan. Known as a poison pill in investment parlance, the plan would allow other shareholders to purchase up to as many shares of stock as they already own at a 50% discount should Elliott, or any other entity, accrue 12.5% or more of outstanding Southwest stock.
"Contrary to the company's statements, Elliott is not seeking control of Southwest," the firm said. "Quite simply, we are seeking to strengthen oversight, upgrade management and improve company performance. Preventing shareholders who do not support the company's failed leadership and oversight from purchasing additional stock reflects exceptionally poor governance and underscores the immediate need for accountability at Southwest."
This report was updated July 8 at 5:30 p.m. with comments from Elliot Management.