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In a significant move, Southwest Airlines has announced its first comprehensive layoffs in the company’s 53-year history, according to a regulatory filing released on Monday. This decision comes as the airline seeks to streamline operations and reduce costs amidst growing financial pressures.
The planned cuts will affect approximately 1,750 employees, representing about 15% of Southwest’s corporate workforce, which totals nearly 12,000. The airline’s leadership structure will also undergo a transformation, with eleven vice president and senior management positions being eliminated, mirroring the same percentage as the overall corporate workforce reductions.
CEO Bob Jordan emphasized the unprecedented nature of these layoffs in a press release, stating, “This decision is unprecedented in our 53-year history, and change requires that we make difficult decisions.” He highlighted that the airline is at a critical juncture in its reformation into a more efficient organization.
According to Southwest’s projections, these layoffs are expected to yield $210 million in cost savings in 2025 and $300 million by 2026. The process of downsizing will commence in April and is slated to be completed by the end of June 2025. Notably, these layoffs will not impact frontline staff such as pilots and flight attendants.
In an internal communication shared with employees and obtained by ABC News, Jordan referred to the layoffs as “a very difficult and monumental shift,” underscoring the necessity for the airline to cut expenses.
Historically, Southwest has managed to avoid similar drastic measures during times of economic downturns, including the 2001 recession, the aftermath of the September 11 attacks, and the COVID-19 pandemic. Nonetheless, the airline has faced intensifying pressures from activist investors and an increase in labor costs. The latest earnings report from the fourth quarter of 2024 indicated that the airline’s Cost Per Available Seat Mile (CASM) rose by 11.1% from the previous year, partially attributed to “elevated labor cost pressure.”
Southwest’s relationship with the activist investment firm Elliott Management has also been tumultuous. The hedge fund, managing approximately $69 billion, sought significant changes within the company. Following a four-month negotiation, a truce was reached in October, allowing Elliott to nominate five directors to Southwest’s board, giving the investment firm impactful representation with over 10% stake in the airline, worth nearly $2 billion.
Despite the challenges, Southwest Airlines reported record revenue of $27.4 billion for 2024. The airline is beginning to implement some of the changes suggested by Elliott, including revising its open seating policy to introduce assigned seating and offering passengers options for extra legroom. However, these adjustments are expected to take years to fully implement.
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