Southwest Airlines has adopted a ‘poison pill’ following activist investor Elliott Investment Management taking a significant stake in the company.
The airline said Wednesday that the shareholder rights plan is effective immediately and expires in a year. Southwest shareholders would need to give prior approval for an extension.
Shareholder rights plans, or “poison pills,” allow existing shareholders to acquire shares at a discounted rate to discourage a takeover by an outside entity. Southwest's plan is triggered when a shareholder acquires 12.5% or more of its common stock, which would let all other shareholders buy stock at a 50% discount.
Southwest said that it adopted the rights plans due to several concerns, including Elliott's approximately 11% stake in the company and the flexibility that the firm has to acquire a significantly greater percentage of Southwest's voting power across two of its funds starting as early as July 11.
“In light of the potential for Elliott to significantly increase its position in Southwest Airlines, the board determined that adopting the rights plan is prudent to fulfill its fiduciary duties to all shareholders," Southwest Chairman Gary Kelly said in a statement. “Southwest Airlines has made a good faith effort to engage constructively with Elliott Investment Management since its initial investment and remains open to any ideas for lasting value creation.”
Last month it was disclosed that Elliott bought a $1.9 billion stake in Southwest and was looking to force out the CEO of the airline, which has struggled with operational and financial problems.
Elliott, in a letter to Southwest's board, then said that Southwest’s stock price has dropped more than 50% in the last three years. The firm also criticized the airline, saying it has failed to evolve, hurting its ability to compete with other carriers. Elliott blamed the Dallas-based company's massive flight cancellations in December 2022 on what it described as the airline’s outdated software and operational processes.
Elliott is looking for executives from outside the company to replace CEO Robert Jordan and Kelly, and for “significant” changes on the board, including new independent directors with experience at other airlines.
Southwest has said that it remains confident in Jordan and its management and their ability to drive long-term value for shareholders. For his part, Jordan has said that he won't resign and that in September his leadership team will present a plan to boost the airline's financial performance.
In midday trading, Southwest shares added 11 cents to $28.41. Shares of the company are down about 21% in the past year, while the benchmark S&P 500 index is up roughly 25% over the same time.
FILE - Robert Jordan, incoming Southwest Airlines CEO, is interviewed outside the New York Stock Exchange, Dec. 9, 2021. Southwest Airlines has adopted a ‘poison pill’ following activist investor Elliott Investment Management taking a significant stake in the company. The airline said Wednesday, July 3, 2024, that the shareholder rights plan is effective immediately and expires in a year. For any extension to occur, Southwest shareholders would need to give prior approval. (AP Photo/Richard Drew, File)
FILE - Southwest Airlines Boeing 737 lands at Manchester Boston Regional Airport, June 2, 2023, in Manchester, N.H. Southwest Airlines has adopted a ‘poison pill’ following activist investor Elliott Investment Management taking a significant stake in the company. The airline said Wednesday, July 3, 2024, that the shareholder rights plan is effective immediately and expires in a year. For any extension to occur, Southwest shareholders would need to give prior approval.(AP Photo/Charles Krupa, File)
PROVO, Utah (AP) — Malfunctioning fireworks veered into the stands at a crowded Utah football stadium and struck members of the audience during a Fourth of July celebration, sending up to six people to the hospital, according to authorities and the event organizer.
The mishap occurred during the opening ceremonies of the Stadium of Fire show, the flagship event at Provo's annual Freedom Festival at Brigham Young University's LaVell Edwards Stadium. The fireworks were shot off inside the outdoor arena as several jets passed overhead.
Organizers halted the show for about 15 minutes while injured audience members received medical attention, Freedom Festival spokesperson Emory Cook said Friday.
As many as six people were taken to the hospital, including one with serious injuries, Cook said, adding that he did not know the severity of the other injuries nor the number of people who were struck by fireworks.
Local authorities are investigating the cause of the mishap.
Videos posted on social media show individual fireworks veering off from the cluster sent into the sky over the field and landing among rows of spectators in the stands at the outdoor arena. About 45,000 people attended the sold-out show, Cook said.
“Definitely a firework malfunctioned, but we're still trying to figure out how that happened,” Cook said. “All the fireworks were installed properly before the event, and they were inspected and approved prior to the show by authorities.”
Teresa Jack of Provo, who was watching the show from the field, said she saw a rocket fly over her head and into the stadium’s east stands, exploding and sending up a big cloud of smoke like a bomb going off.
People in the crowd started waving to let officials know there were injuries and yelling “stop the show” at the speaker on stage, she said.
People were asked to remain in their seats while injured people were told to report to a medical tent for treatment, said Jack, a well-organized response she credits for preventing a stampede.
Fire department personnel and paramedics were on scene when the show started and reached the injured audience members within a minute, said Provo Fire and Rescue spokesperson Jeanie Atherton.
She said her department transported only one person to the hospital but that other victims might have gone by personal vehicles.
The event, which featured the Jonas Brothers, resumed under approval from the Provo fire marshal after the fireworks had been inspected following the accident, said BYU police department spokesperson Karen Ellingson.
The fireworks that malfunctioned inside the stadium were relatively small compared with the large pyrotechnics that are used during the show’s finale, Cook said. Those larger fireworks are kept outside the stadium, he said.
The Fourth of July show was organized by Stellar Fireworks of Wichita, Kansas. Company representative Andrew Nguyen said the pyrotechnics that misfired were from a device called a repeater that fires 25 shots simultaneously.
“It blew apart and instead of the shots being oriented vertically, they became horizontal because the device had no structure,” he said.
Nguyen added that the company has staged fireworks shows in Provo for 40 years without a comparable incident.
Jack, who went to the festival to see the Jonas Brothers, said she and her friends almost left during the finale partly because of the earlier malfunction but stayed because the display was amazing. But she said she was just as impressed with the drones as the traditional fireworks in the show, which made her wonder if that would be the better way to celebrate Independence Day.
“It might be time for us to reevaluate this tradition,” she said.
Fireworks explode in the sky during a July Fourth celebration at LaVell Edwards Stadium, Thursday, July 4, 2024 in Provo, Utah. Several people were injured when fireworks misfired and struck members of the audience inside the football stadium police said.(Isaac Hale/The Deseret News via AP)
Smoke appears in the stands during a July Fourth fireworks celebration at LaVell Edwards Stadium, Thursday, July 4, 2024 in Provo, Utah. Several people were injured when fireworks misfired and struck members of the audience inside the football stadium police said.(Teresa Jack via AP)
The crowd reacts after an errant firework exploded among attendees during Stadium of Fire held at LaVell Edwards Stadium in Provo, Utah, on Thursday, July 4, 2024. Several people were injured when fireworks misfired and struck members of the audience inside the football stadium police said. (Isaac Hale/The Deseret News via AP)
The crowd watches as a member of Provo Fire and Rescue searches for an injured individual after an errant firework exploded among attendees during Stadium of Fire held at LaVell Edwards Stadium in Provo, Utah., on Thursday, July 4, 2024. Several people were injured when fireworks misfired and struck members of the audience inside the football stadium police said. (Isaac Hale/The Deseret News via AP)
