(Reuters) - 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, citing people familiar with the matter.

The parties are negotiating a deal that would grant the activist investor several board seats but fewer than a majority, the report said, adding that a settlement could be announced as soon as Thursday.

(Reporting by Bipasha Dey in Bengaluru; Editing by Janane Venkatraman)