For the first time in its 53-year history, Southwest Airlines is implementing mass layoffs as part of a cost-cutting strategy. The airline announced on Monday that it will eliminate 1,750 corporate positions, affecting 15% of its nearly 12,000-person corporate workforce. In addition, eleven senior leadership roles at the vice president level and above will be cut, amounting to 15% of the company’s senior management committee.
CEO cites need for a ‘Leaner’ Southwest
“This decision is unprecedented in our 53-year history, and change requires that we make difficult decisions,” Southwest CEO Bob Jordan stated in a press release. “We are at a pivotal moment as we transform Southwest Airlines into a leaner, faster, and more agile organization.”
The layoffs will begin in April and are expected to be completed by the end of June 2025. Notably, front-line workers such as pilots and flight attendants will not be impacted.
Cost savings projected at $300 million by 2026
Southwest estimates that these cuts will result in $210 million in cost savings in 2025 and $300 million by 2026. In an internal note obtained by ABC News, Jordan acknowledged the difficulty of the decision but emphasized the need to control expenses.
The airline had previously avoided large-scale layoffs during economic downturns, the 9/11 attacks, and the COVID-19 pandemic. However, it is now under increasing pressure from activist investors and rising labor costs. In its fourth-quarter earnings report for 2024, Southwest reported an 11.1% year-over-year increase in its Cost Per Available Seat Mile (CASM), a key industry metric, largely due to higher labor expenses.
Activist investors push for changes
Southwest has also faced mounting pressure from Elliott Investment Management, a hedge fund and activist investor that recently became one of the airline’s largest shareholders, holding a stake worth nearly $2 billion. Following a months-long dispute, Southwest reached a truce with Elliott in October, agreeing to appoint five board directors nominated by the hedge fund.
As part of ongoing restructuring efforts, Southwest is now implementing some of Elliott’s proposed changes, including an overhaul of its open seating policy in favor of assigned seats and an option to purchase seats with extra legroom. However, these modifications could take several years to roll out.
Despite challenges, southwest posts record revenue
Despite facing financial and operational hurdles, Southwest reported record annual revenue of $27.4 billion in 2024. However, the airline is under pressure to improve efficiency and reduce costs while maintaining its competitive edge in the industry.
The upcoming layoffs mark a significant shift for Southwest, which has long prided itself on employee retention and a strong corporate culture. As the airline moves forward with these cost-cutting measures, employees and customers alike will be watching closely to see how these changes affect the company’s future.
