IndiGo Co-Founder & Southwest Airlines Director Buys $100 Million More Stock Opposing Elliott’s Push For Management Change
Rakesh Gangwal, co-founder of IndiGo
and a board of directors member at Southwest Airlines, had gone on a shopping spree to acquire the latter airline’s shares, with the director now owning over 3.6 million of common shares of Southwest Airlines.
According to six separate filings Southwest Airlines published via the United States
Securities and Exchange Commission (SEC), Gangwal purchased over 3.6 million of the carrier’s common shares.
Southwest Airlines filed its documents with the SEC regarding the transactions on October 2.
Photo: lorenzatx | Shutterstock
In addition to Gangwal, Bob Jordan, the president and chief executive officer (CEO) of Southwest Airlines, and Gary Kelly, the executive chairman of the board, acquired shares.
Jordan bought 97,872 shares for a price of $29.63 per share via his retirement savings plan, with the executive now indirectly and directly owning 110,846 and 335,688 shares, respectively.
Kelly shifted 84,212 shares from one family limited partnership to a family trust while also directly acquiring 33,921 of Southwest Airlines’ stock for an average price of $29.52.
Jordan and Kelly completed their transactions on September 30, while Gangwal purchased the carrier’s stock on September 30 and October 1.
Less than 1% of the total float
However, while Gangwal’s acquisition of 3.6 million shares – prior to the transactions, he held 6,511 shares – set him back more than $100 million, he will hold less than 1% of the total float of the airline’s stock.
According to 
Southwest Airlines
, it has issued over 599.1 million shares. Yahoo Finance data showed that the airline’s float was 535.13 million, which indicated the total number of stock that was available to the public.
Photo: Joe Kunzler | Simple Flying
Nevertheless, with Gangwal being a director of the company, his over $100 million share purchase has only resulted in the executive acquiring a 0.6% stake in Southwest Airlines.
Gangwal told Reuters that he believed that further changes to the board or C-level executive team would be counterproductive and would not serve the best interests of the carrier’s shareholders.
When Southwest Airlines announced the co-founder of IndiGo as an addition to its board, activist investor Elliott Investment Management (Elliott) criticized the move.
In a publicly published letter that Elliot sent to the board of the carrier, the investment firm said that since it published its ‘Stronger Southwest’ plan, the board’s actions “have only solidified the case for leadership change.”
“These actions included […] appointing a new director to the Board today who appears to have been chosen in part due to his support for the Company’s status-quo leadership and plan.”
Elliott previously stated that it had acquired an approximate 11% stake in the airline,
enough to call a special shareholders meeting to oust Jordan, which it said it has plans to do.
Addressing the company’s shareholders
On October 2, the airline also revealed a letter that Jordan sent to the company’s shareholders in an SEC filing.
The carrier’s CEO sent the letter following its investor day on September 26, where Southwest Airlines outlined and explained some of the upcoming changes that will be coming to the airline’s operations in the next few years.
“It is an exciting time for Southwest. Our transformational plan is the result of the dedicated work of our Team over the last year and reflects feedback and input we received from investors; and for that, we thank you.”
Jordan reiterated the company’s goal to deliver a return on invested capital (ROIC) of at least 15% and drive around $4 billion in cumulative incremental run rate earnings before interest and taxes (EBIT) contribution in 2027.
Photo: Lukas Souza | Simple Flying
The CEO added that the airline’s transformation plan has four key pillars, including tactical initiatives, monetizing its customer value proposition, increasing operational efficiency, and optimizing capital allocation.
“We have a plan that is actionable, time-bound, data-driven, and supported by significant research. I am accountable for delivering on our plan and expected results, as is our team and our Board. The entire Southwest Team and I are energized about the plan, and I am confident in our ability to achieve it.”
Before the carrier’s investor day, Elliott issued a statement saying that the event would reverberate a similar tone for shareholders: empty promises of a better tomorrow “from the same people who have created the problems we face today.”
Elliott reiterated its position that Jordan had to step down from his role as president and CEO, rhetorically questioning why the executive, whom the investment firm blamed for Southwest Airlines’ underperformance in the past few years, would be the right leader to lead the airline through the transformation process.
