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Accountability Matters

Accountability Matters

April 17, 2023
Those of us who are shareholders of Southwest Airlines stock should have received proxy materials regarding the re-election of 12 members of the SWA Board of Directors in preparation for the annual Southwest shareholders meeting to be held on May 17 (completely virtual this year).

As we are all aware, a company's board of directors is responsible for overseeing the management of a public company and ensuring that it is acting in the best interests of its shareholders. Members are elected by the shareholders of the company, usually at an annual meeting, and they serve as the company’s governing body regarding a company’s strategic direction, financial performance, and corporate governance. Most importantly, the board of directors of a public company is accountable to its shareholders and is required to act in their best interests. As an example in the airline industry, one may remember the JetBlue Airways BOD forcing CEO David Neeleman to relinquish his CEO title following the infamous Valentine’s Day meltdown in 2007.

So it is necessary to ask these questions of the 12 BOD members up for re-election: Where were you during the numerous operational meltdowns of the past 10 years? What was the BOD’s reaction as SWAPA and other employee groups continually warned about the lack of technology investment and outdated systems? The warning signs were there. As a result of ignoring those warnings, the October 2021 disruption cost the Company $75 million and the latest one will cost north of $1 billion. We know the priority of increasing shareholder value through dividends and buybacks has been a constant theme, but what about our airline’s operational performance? Where does this fit onto their list of priorities? Unfortunately, the answer seems pretty clear, at least up to this point.

We, as Pilots and long-term investors in the Company, have a significant stake in the success of Southwest Airlines. We believe the Southwest BOD has not provided adequate oversight or taken appropriate actions necessary to address the multitude of operational issues since 2014. Therefore, it is SWAPA’s responsibility to ask the Pilot group to consider the best interests of Southwest Airlines and to vote against the re-election of these 12 members of the SWA Board of Directors.

Tom