Shares of Southwest Airlines jumped around 7% in premarket trading on Monday after a report from the Wall Street Journal that Elliott Investment Management has a $2 billion stake in the aircraft carrier. As one of Southwest’s biggest investors, the company plans to advocate for adjustments that would turn around the carrier’s underperformance.
Increasing costs and delays in shipments of Boeing’s 737 MAX airplanes have affected Southwest’s revenue growth, The airline said those delivery delays have caused “significant challenges” and led to the company being overstaffed and having to manage its growth plans. Southwest shares have dropped around 4% this year.
“We are not surprised by the activist interest in Southwest given the very strong franchise with valuable tangible and intangible assets,” Raymond James analyst Savanthi Syth wrote in a note.
