Southwest adds former US Airways CEO to board as it battles activist

Southwest Airlines announced Monday that it's adding former US Airways CEO Rakesh Gangwal to its board of directors. The appointment comes as it seeks to fend off an activist push from Elliott Management.

The latest defensive maneuver aims to blunt Elliott's accusations that Southwest's board is long-tenured and insular. The two sides have been in conversation since Elliott first announced it had an 11% economic interest in the airline in June.

Gangwal was CEO of the now-defunct US Airways in the late 1990s and early 2000s, before founding Indian low-cost carrier IndiGo in 2006. IndiGo has since grown into the largest airline in Asia, carrying more than 106 million passengers in fiscal year 2024.

Southwest announced the board expansion less than a week after it adopted a shareholder rights plan, limiting investors' ability to grow their stakes beyond a 12.5% threshold.

"I am delighted to welcome Rakesh, who brings to our Board decades of valuable experience as an executive and entrepreneur at some of the world's leading airlines," Southwest executive chairman Gary Kelly said in a release.

Elliott is seeking the ouster of Kelly, Southwest's CEO before becoming executive chair, and Bob Jordan, who has served as Southwest's CEO since 2022. The activist investment firm has argued Southwest needs leadership change to revive a lost culture of innovation, and has blamed Kelly and Jordan for the company's deteriorating margin and share price relative to peers.

An Elliott spokesperson did not immediately respond to a request for comment. Southwest will hold its investor day in September when it is expected to provide further updates.