Southwest Airlines ( LUV ) just got a big endorsement of its turnaround plan — from the inside. Reuters reports that board of directors member Rakesh Gangwal, the founder of the Indian budget airline Indigo, purchased a $100 million block of shares of the company.
Gangwal is one of several new board members nominated during Southwest’s fight with Elliott Investment Management , a hedge fund that wants CEO Bob Jordan out of the job , the installation of a slate of directors , and a comprehensive business review. Other board additions include Roy Blunt , a former U.S. senator from Missouri, and Robert Fornarno , the former CEO of Spirit Airlines ( SAVE ).
“I have long admired Southwest Airlines and am honored to join the Board,” Gangwal said in a statement accompanying the announcement of his appointment . “Together with the rest of the Board, I look forward to supporting the Company’s strategic direction and building on its well-earned reputation as one of the world’s most admired and respected airlines.”
Southwest has been making a lot of changes , including an expected reduction in routes, layoffs, and other shifts like abandoning its longstanding open-seating policy . Elliott has said that after a long run of bad business, the moves are t oo little, too late .
A Securities and Exchange Commission filing shows that Gangwal’s shares were purchased on Tuesday . According to the data provider FactSet ( FDS ), Gangwal’s stake dwarfs the holdings of CEO Jordan, who owns $28 million of Southwest stock. Elliott’s $1.8 billion in holdings, good for 11% of the company, dwarfs both. The hedge fund told Southwest’s other investors that it wants to hold a special meeting to enact its takeover plan, though it has not put out a firm date.
Gangwal made his commitment to Southwest-as-it-is firm, telling Reuters that he believes “changing the board structure and top leadership beyond what has been already announced, would be counterproductive and not in the best interest of shareholders.”
Southwest stock is up 4% in early trading Thursday, and shares are up 8.4% for the year.
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