Southwest also plans to buy back $250 million in stock in the fourth quarter after announcing a new $2.5 buyback program last month.

Southwest Airlines (LUV) announced a settlement with Elliott Investment Management Thursday morning, ending a months-long battle with the activist investor that has been calling for significant leadership and business strategy changes at the carrier.

Southwest agreed to reduce its board to 13 seats by its 2025 shareholder meeting, with Elliott-sponsored candidates set to take five of those spots, with a sixth replacement seat going to former Chevron (CVX) CFO Pierre Breber. The new board members will replace six retiring members -- including Executive Chairman Gary Kelly, who previously served as Southwest's CEO -- on November 1, the company said.

As part of the settlement, Elliott has agreed to drop its call for a December special shareholder meeting as Elliott Partner John Pike and Portfolio Manager Bobby Xu said they believe the airline is now well positioned to "enhance business performance, drive operational execution and evaluate additional changes to create long-term shareholder value."

News of the settlement came shortly after Southwest reported third-quarterly results that exceeded Wall Street expectations.

The airline reported $6.87 billion in total revenue, up nearly 6% from the same time last year and a bit better than analyst estimates compiled by Visible Alpha. Net income fell sharply year-over-year to $67 million from $193 million last year, but didn't fall as far as analysts had projected, to $19.8 million.

The airline also said it plans to buy back $250 million in stock in the fourth quarter, the first "accelerated share repurchase program" since it announced a new $2.5 billion stock buyback plan last month.

Southwest shares were down nearly 2% in premarket trading about an hour before the opening bell. Through Wednesday's close, the stock had risen 6% so far in 2024, significantly lagging the S&P 500's 22% gain over the period.