(Bloomberg) -- Activist Elliott Investment Management called for sweeping changes to Southwest Airlines Co.’s leadership to reverse what it sees as years of underperformance by one of the biggest US carriers.

The investor also demanded an overhaul of the airline’s strategy in a letter Monday that revealed a $1.9 billion stake, making Elliott one of its biggest shareholders. Elliott specifically criticized Southwest Chief Executive Officer Bob Jordan and Executive Chairman Gary Kelly for poor execution and a “stubborn unwillingness to evolve the company’s strategy.”

“Southwest’s executive chairman and its CEO, who have spent a combined 74 years at the company, have presided over a period of severe underperformance, and they have demonstrated that they are not up to the task of modernizing Southwest,” the activist said.

Southwest said in a statement Monday that it will try to better understand Elliott’s views after being contacted by the firm a day earlier. “The Southwest board of directors is confident in our CEO and management’s ability to execute against the company’s strategic plan.”

Elliott’s demands sent Southwest shares soaring as much as 8.4% in New York to $30.08, the biggest intraday gain since March 2022. The Dallas-based carrier, which has a market capitalization of about $17.7 billion, had declined 3.9% this year through Friday and has lost nearly half of its value over the past five years.

“We are not surprised by activist interest in Southwest given the very strong franchise with valuable tangible and intangible assets,” Savanthi Syth, a Raymond James analyst, said in a report.

Despite its well-known brand and sizeable fleet, Southwest has struggled to capitalize on robust travel demand in recent years, burdened by high costs and constraints on its growth. Labor expenses have ballooned, with a round of costly new contracts that were the first negotiated since the pandemic. The company, which flies only Boeing Co. 737s, has also been particularly affected by delayed aircraft deliveries as the planemaker struggles with production problems.

Southwest has already taken steps this year to reduce flight capacity, pull out of several airports and slow hiring. The carrier said in April it would “significantly restructure” other markets, including operations in Chicago and Atlanta.

That same month, Southwest reported an adjusted first-quarter loss of 36 cents a share, deeper than Wall Street had expected. Revenue also came in short of estimates. Elliott called out management for failing to get a handle on deteriorating finances, as highlighted by seven negative guidance revisions over a 17-month span. 

The company’s reputation has also suffered from a significant flight disruption in late 2022 that stranded millions of passengers over the holidays. A winter storm overwhelmed its systems over multiple days, forcing cancellation of more than 16,000 flights, costing the company nearly $1.2 billion. That underscored the carrier’s failure to sufficiently invest in its operations, Elliott said.

More time won’t fix Southwest’s issues, according to a website set up by Elliott, citing a “complacent approach and lack of urgency to confront challenges.”

Elliott said a turnaround at Southwest is “eminently achievable.” Change should begin immediately, the activist said, allowing the airline to update investors on a go-forward strategy by year-end. The stock could reach $49 a share within 12 months, Elliott said.

The firm called for new leadership from outside the company “to improve operational execution and lead the evolution of Southwest’s strategy.” It also recommended changes to the board, including adding directors with external airline experience.

Led by Paul Singer, Elliott is one of the world’s most active boardroom agitators. The firm had already launched campaigns at companies with a combined market value of about $100 billion this year — including at UK-listed miner Anglo American Plc and Japanese trading house Sumitomo Corp.

The Southwest push comes shortly after another activist, investor Carl Icahn, took a stake in JetBlue Airways Corp. earlier this year. That carrier subsequently gave the shareholder two board seats.

--With assistance from Crystal Tse, Alan Goldstein and Anthony Palazzo.

(Updates with additional details throughout)

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