Investing.com — Shares in Southwest Airlines (NYSE:) surged by more than 6% in premarket U.S. trading on Monday after the Wall Street Journal reported that Elliott Investment Management has built up a nearly $2 billion stake in the carrier and intends to push for changes to reverse its recent underperformance.
The activist investor is now one of Southwest’s largest shareholders, the WSJ added, citing people familiar with the matter.
The report comes as Southwest’s shares are trading down nearly 4% so far in 2024 and are hovering below their level in March 2020, when the COVID-19 pandemic sparked travel restrictions that weighed heavily on the wider airline industry.
Along with the impact of COVID, Southwest, which once posted 47 consecutive years of profits, has been hit by higher costs stemming from new labor contracts and delays to deliveries from embattled planemaker Boeing (NYSE:).
“Potential activist engagement at Southwest could bring a breath of fresh air,” analysts at Barclays said in a note to clients following the report.
Ambar Warrick contributed to this report.