US Hedge Fund Elliott Secures $2 Billion Stake in Southwest Airlines

American activist hedge fund Elliott has acquired a stake worth approximately $2 billion (about 2.755 trillion KRW) in Southwest Airlines, the Wall Street Journal (WSJ) reported on the 9th (local time).

According to sources familiar with the matter, Elliott has become one of the largest investors in Southwest Airlines.

[Image source=Reuters Yonhap News]

Elliott plans to cooperate with Southwest Airlines' management. Specific management plans have not been confirmed.

Elliott is known for its strategy of acquiring companies and demanding comprehensive organizational restructuring, including changes in management, to increase stock prices and secure profits. Recently, CEOs have changed at Crown Castle and NRG Energy, where Elliott secured stakes. Domestically, Elliott has raised issues regarding the merger process of Samsung C&T and Cheil Industries, and has demanded improvements in corporate governance from Hyundai Motor Group.

Southwest Airlines' stock price has fallen to less than half over the past three years. On the 7th, the stock closed at $27.75, which is lower than the level in March 2020 when the company was hit hard by the COVID-19 pandemic. During the same period, the S&P index rose more than 30%.

Southwest Airlines significantly increased its cost burden after reaching an agreement with the pilots' union at the end of last year to raise wages by 50% over five years. Additionally, the company was hit by delays in the delivery of new Boeing aircraft following the Alaska Airlines accident in January.

This content was produced with the assistance of AI translation services.