On Monday, the second largest stakeholder in Southwest Airlines initiated a proposal for a special shareholders’ meeting to vote on a slate of eight new directors. This initiative aims to obtain a majority on the board of a company that has been facing significant challenges recently.

Elliott Management, the hedge fund spearheading this push, has been vocal in its critiques of Southwest’s management and strategic direction. Despite some adjustments made by the airline, the changes have not satisfied the firm, which is headed by billionaire Paul Singer. Elliott posits that without a complete overhaul of the board, the airline’s future will remain plagued by unmet expectations and underutilized opportunities.

Recently, Elliott Management increased its holdings in Southwest Airlines to 11% and has scheduled the requested shareholder meeting for December 10. The hedge fund had previously sought the appointment of ten directors, but Southwest recently reduced its board size from 15 to 12 members, a decision that will take effect after the firm’s 2025 annual meeting.

Elliott has contended that the current leadership has not kept pace with changing customer preferences nor adequately modernized the airline’s technological framework. These shortcomings were highlighted by the significant flight disruptions in December 2022, which cost Southwest upwards of $1 billion.

Since the beginning of 2023, Southwest has made strides to improve its operations, achieving a cancellation rate that is slightly better than the industry average and outperforming competitors like United, American, and Delta, according to data from FlightAware. However, the airline’s aircraft have been involved in several alarming incidents this year, including a near-miss that brought a flight dangerously close to crashing into the Pacific Ocean. This prompted the Federal Aviation Administration to intensify its regulatory oversight of Southwest.

In late September, executives at Southwest Airlines unveiled their ambitious plan known as Southwest 2.0, which includes offering assigned seating for the first time ever, charging additional fees for increased legroom, and launching red-eye flights. Nevertheless, the airline maintains its policy of complimentary checked bags, a hallmark of its service.

The airline will also revamp its vacation package offerings and is looking to establish partnerships with international carriers like Icelandair starting next year. The aim is to enhance the appeal of Southwest’s credit card and frequent-flyer program to attract more customers.

These initiatives signify some of the most substantial changes in Southwest’s history, marking a pivotal moment for the airline that once epitomized low-cost travel but is now grappling with declining financial performance as it reaches its middle years. Throughout its first five decades, Southwest consistently reported profits, never experiencing a full-year loss until the pandemic drastically affected air travel in 2020.

Since that downturn, although Southwest has remained more profitable than American Airlines, it still trails behind its competitors, Delta and United, in terms of overall profitability.