Southwest Airlines Ends Feud With Activist Investor Elliott

Southwest Airlines struck a truce with Elliott Investment Management, giving the activist a significant presence on its board but not the majority control the hedge fund initially sought.

The settlement announced Thursday deflects a potentially rancorous proxy fight and ends the acrimonious four-month battle over whether Southwest’s management is capable of pulling the airline out of a funk.

Elliott got much of what it wanted. Five of its proposed directors will be added to the budget-airline pioneer’s board, including former Virgin America boss David Cush and former WestJet Chief Executive Gregg Saretsky. Former Chevron finance chief Pierre Breber will also join the board, which will be reduced to 13 members next year.

Southwest Executive Chairman Gary Kelly, who served as the airline’s CEO for nearly two decades, will leave the board earlier than planned and hold the title chairman emeritus. A new independent chair will be named later, Elliott and Southwest said.