Elliott Investment Management has acquired a 10% stake in Southwest Airlines' common stock, reaching a level that permits the hedge fund to request a special meeting with the airline, as reported by a source familiar with the situation.

This development occurs just days before a scheduled meeting on September 9, where both parties will discuss strategies to address issues that have led to a significant decline in Southwest's stock value, which has dropped by approximately 50% over the past three years.

The hedge fund, recognized as one of the most influential activist investors globally with $70 billion in assets, has called for the removal of CEO Robert Jordan and Executive Chairman Gary Kelly. Additionally, it has proposed the nomination of 10 candidates for the airline's 15-member board.

Elliott had previously held an 11% economic interest through derivatives but has now converted enough of those holdings into common stock to surpass the 10% threshold, while its total economic stake remains unchanged.

A representative from Southwest was not immediately available for comment. Jordan, who has served as CEO since 2022, has expressed his intention to remain in his position and has indicated to employees that he and other executives are prepared to confront Elliott.

The hedge fund has communicated to other shareholders its readiness to take further action, including calling a special meeting, unless the company is open to discussing leadership changes.

Special meetings, which are convened to gather shareholder votes on urgent matters before the next annual meeting, are uncommon. Should Elliott decide to call one, it would mark a significant escalation in its campaign against the airline since its stock interest became public in June.

In an effort to enhance its image and stabilize its share price, the airline has implemented a shareholder rights plan designed to restrict any investor from acquiring more than 12.5% of its stock.

In July, Southwest Airlines revealed its intentions to increase the number of seats with enhanced legroom, transitioned to a system of assigned seating, and appointed a new member to its board.

As of June 7, the airline's stock had plummeted by 50% over the past three years, closing at $27.75 just prior to the announcement of Elliott's investment on June 10. By the end of trading on Friday, the stock had risen to $28.92.

The company's market capitalization has significantly decreased from $41 billion in 2017 to $17 billion currently, as reported by Elliott's analysis. Elliott has criticized the proposed improvements as being insufficient and delayed.

Previously, Elliott has advocated for the removal of high-ranking executives, including NRG CEO Mauricio Gutierrez, who initially resisted but ultimately resigned late last year. Since the disclosure of Elliott's stake in May 2023, NRG's stock has surged by approximately 160%.