Southwest Airlines struck a truce with Elliott Investment Management, giving the activist a significant presence on its board but not the majority control the hedge fund initially sought. The settlement announced Thursday deflects a potentially rancorous proxy fight and ends the acrimonious four-month battle over whether Southwest’s management is capable of pulling the airline out of a funk.

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.

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.

After more than four months of waging a public battle with activist investor Elliott Investment Management, low-cost pioneer Southwest Airlines. may

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

Activist investor Elliott Investment Management and Southwest Airlines are in talks to settle their months-long battle, according to reports Sunday, with a potential deal that would give Elliott representation on the budget airline’s board.