Southwest Airlines Chairman Gary Kelly to Retire Amid Investor Pressure

Southwest Airlines announced on Tuesday that Gary Kelly, its executive chairman and former CEO, will retire in 2025. This decision comes as the airline faces increased scrutiny from Elliott Investment Management, an activist investor pushing for significant changes at the Dallas-based carrier.

In a letter to shareholders, Kelly stated, “Now is the time for change. It’s time to shake things up, not just stir them a bit.” He emphasized the importance of making thoughtful adjustments while preserving the airline’s core strengths. Kelly, who has been with Southwest for nearly 40 years and has served as chairman since 2008, made his retirement announcement following a meeting with Elliott Investment Management.

Elliott, which revealed a nearly $2 billion stake in Southwest in June, has been advocating for leadership changes, including the ousting of CEO Bob Jordan. Jordan, who has also been with Southwest for nearly four decades, has faced criticism from Elliott for what they describe as “stunning underperformance” under his leadership.

Despite Elliott’s demands, Kelly’s statement confirmed that Southwest’s board and leadership “unanimously support Bob Jordan as CEO.” As part of the upcoming changes, six members of Southwest’s board will retire in November. The airline plans to appoint four new independent directors, including potentially up to three candidates proposed by Elliott.

Elliott Investment Management recently surpassed the 10% ownership threshold needed to call a special meeting, although the firm has not yet responded to requests for comment. Elliott is known for its previous campaigns at companies like AT&T, Salesforce, and Texas Instruments but has not publicly targeted an airline before.

In response to the pressure, Southwest has enlisted outside experts, including Bob Fornaro, former CEO of Spirit Airlines and AirTran, which Southwest acquired. The airline is grappling with challenges such as an oversupplied U.S. domestic market, rising costs, and delays in aircraft deliveries from Boeing, its sole supplier.

Historically, Southwest has adhered to a simple business model that revolutionized the U.S. airline industry and contributed to decades of profitability, bolstering its investment-grade balance sheet. However, the carrier recently announced several major changes, including offering extra legroom and abandoning its long-standing open seating policy—its most significant modifications in over 50 years. Southwest also plans to introduce overnight, or “redeye,” flights next year.

Southwest Airlines will hold an investor day on September 26 in Dallas to discuss these new initiatives and other strategic plans.