Elliott Investment Management and Southwest Airlines

(Reuters) – Elliott Investment Management and Southwest Airlines (NYSE:LUV) are close to reaching a settlement that could prevent a proxy battle for control of the airline's board, according to a report by Bloomberg News on Wednesday.

The parties are negotiating a deal that would provide the activist investor with several board seats, although fewer than a majority. A settlement announcement could come as soon as Thursday.

The exact number of board seats Elliott may secure was not disclosed. The activist investor holds a 10% stake in Southwest and is looking to replace eight directors to gain control of the board, which is expected to reduce from 15 to 12 members next year.

Elliott had previously escalated its campaign by calling for a special shareholder meeting, pushing to replace board members, oust CEO Bob Jordan, and urging the airline to reassess its strategy for improving financial performance and elevating the share price.

The report indicates that the implications of any potential settlement for CEO Jordan remain unclear, and the talks are not finalized; there is still a chance negotiations could fail.

Southwest did not provide comments on the report, and Elliott did not respond to inquiries outside business hours.

The airline has been working to regain profitability since the COVID-19 pandemic, implementing strategies such as adding seats with more legroom and eliminating its signature open seating policy.