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Case Details for "Southwest Airlines Co."
Southwest Airlines Co. settles securities class action lawsuit
Southwest Airlines Co. has agreed to settle a shareholder lawsuit that grew out of safety violations at the carrier and will pay the investors' lawyers $3.5 million. The lawsuit was filed in August 2008, after the Federal Aviation Administration announced it would fine Southwest $10.2 million for operating some planes that had not gone through a required inspection for structural soundness. Southwest settled by agreeing to pay a $7.5 million penalty. Investors alleged that the airline's leaders failed to protect the interests of shareholders.
In addition to paying $3.5 million for the plaintiffs' legal expenses, the Dallas-based company agreed to add safety-related employees throughout the company and increase training for maintenance workers for at least two years. In exchange, the plaintiffs agreed to drop claims against Southwest and several directors and executives, including CEO Gary Kelly and former CEO Herb Kelleher. Southwest also said in a Securities and Exchange Commission filing that it agreed to make reforms in governance practices.
Southwest also faces class-action lawsuits filed by passengers who flew on the airline while it operated planes that hadn't gone through all the required checks. They charge the airline was reckless.
Posted on:2009-10-27
Company: Southwest Airlines Co.
Class: n/a
Scope: Nationwide
Type of Case: Securities
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