Elliott Investment Management acquired a $1.9 billion stake in Southwest Airlines and is pushing to replace the company’s CEO as the airline battles operational and financial challenges.

Southwest has been struggling with lower earnings and profits compared to its rivals due to increased expenses from recent labor agreements. 

Additionally, delays in receiving new planes from Boeing and their certifications following the Alaska Airlines flight accident in January have hindered Southwest’s expansion efforts. Out of the previously expected 79 new aircraft, the airline now foresees only 20 new Boeing deliveries this year.

In a letter to Southwest’s board, the investment firm complained the airline’s stock value has declined by more than 50% in the past three years. The investment firm criticized its failure to innovate, which has hindered its competitiveness in the industry. 

“Poor execution and leadership’s stubborn unwillingness to evolve the Company’s strategy have led to deeply disappointing results for shareholders, employees and customers alike,” the investment firm wrote.

It also said the Dallas-based carrier’s outdated software and operational processes were responsible for the airline’s extensive flight cancellations in December 2022 that cost nearly $1.2 billion. Additionally, Southwest had to face a $140 million civil penalty for those service disruptions. 

In the letter, the investment firm criticized Southwest CEO Robert Jordan, saying he “has delivered unacceptable financial and operational performance quarter after quarter,” and neither he nor Executive Chairman Gary Kelly “are up to the task of modernizing Southwest.”

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Elliott Investment Management is known for its interventions in various tech companies, often forcing significant changes such as management restructuring or complete sell-offs. For instance, Crown Castle, NRG Energy, and Goodyear Tire and Rubber Company experienced CEO replacements following Elliott’s involvement.

“The Southwest Board of Directors is confident in our CEO and management’s ability to execute against the company’s strategic plan to drive long-term value for all shareholders, safely and reliably serve our customers and deliver on our commitments to all of our stakeholders,” a spokesperson said in a statement.