Southwest Airlines (LUV.N) director Rakesh Gangwal made headlines on Wednesday after purchasing over $100 million in the airline’s stock, amid increasing pressure from activist investor Elliott Investment Management for significant changes in the company’s leadership. Gangwal, who co-founded India’s low-cost carrier InterGlobe Aviation (IndiGo), bought approximately 3.6 million shares at prices between $29 and $30 each on September 30 and October 1, according to filings with the Securities and Exchange Commission (SEC).
The timing of Gangwal’s purchase coincided with the reopening of the trading window for company insiders, highlighting his confidence in the airline’s potential despite the current tumult. His entry onto the Southwest board in July came at a pivotal time, as Elliott Investment Management ramped up its demands for leadership and strategic reforms to enhance the airline’s financial performance. In response to these pressures, Southwest announced last month a substantial overhaul of its board, including the impending retirement of executive chairman Gary Kelly and six other board members from its 15-member panel.
Despite these changes, Elliott has maintained its stance, insisting on further restructuring, including the removal of CEO Bob Jordan. The activist firm has expressed intentions to call a special shareholder meeting to advocate for these changes. However, Gangwal cautioned against further upheaval in the executive ranks, stating, “I believe changing the board structure and top leadership beyond what has been already announced would be counterproductive and not in the best interest of shareholders.” His investment signals a vote of confidence in the current management direction while also advocating for stability during a challenging period for the airline.
As the situation unfolds, the airline industry is closely watching how Southwest navigates these pressures and whether it can successfully implement the requested changes while maintaining investor confidence.
