Southwest Airlines posted third-quarter profit well above Wall Street’s expectations and revealed that it had struck a deal to end its feud with activist hedge fund Elliott Investment Management on Thursday.

Elliott Investment Management and Southwest Airlines Co. are nearing a settlement that would avoid a proxy fight for control of the carrier’s board, according to people familiar with the matter.

Elliott Investment Management and Southwest Airlines are close to reaching a settlement agreement that would avert a proxy battle over control of the airline's board, Bloomberg News reported on Wednesday,

Southwest Airlines Co. (NYSE: LUV) announced early Oct. 24 an agreement with activist investor Elliott Investment Management that will reshape the Dallas-based airline's board and avert a proxy fight.

Elliott and Southwest have reached an agreement on a reconstituted board of directors that will keep the airline's current executive leadership in control, but weakened, and preserve the job of CEO Bob Jordan.

Activist investor Elliott Investment Management and Southwest Airlines are close to a settlement deal that would give the dissident sizable representation on the company’s board, according to a person familiar with the matter.

"I believe Southwest’s best days lie ahead," said Gary Kelly, who will soon step down as board chair as part of the deal.

The parties are currently negotiating terms that would provide Elliott with a number of board seats, though less than the majority, to ensure that control remains with the airline, according to a report.

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