Southwest Pauses Corporate Hiring, Most Summer Internships to Cut Costs
Skift Take
Key Points
- Southwest Airlines is pausing corporate hiring and most summer internships to cut costs and improve financial performance.
- The decision follows a contentious interaction with activist investor Elliott Investment Management, which ended in a settlement granting board seats.
- Southwest's profitability has been affected by Boeing delivery delays, high demand for premium travel, and costly labor contracts.
Summary
Southwest Airlines has decided to pause corporate hiring and most summer internships as a cost-cutting measure aimed at improving its financial performance. This move follows a challenging dispute with activist investor Elliott Investment Management, resulting in a settlement that included board changes. Boeing delivery delays, high demand for premium travel, and expensive labor contracts have significantly impacted Southwest's profits.
Southwest Airlines is halting corporate hiring and most summer internships as part of an effort to cut costs.
“Every single dollar matters as we continue to fight to return to excellent financial performance,” CEO Bob Jordan told staff in a note on Monday, according to CNBC.
A Southwest spokesperson confirmed the hiring pauses to Skift.
“We are limiting discretionary costs, including holding on the Southwest Rallies for this year, as we focus on reducing costs,” a Southwest spokesperson said in a statement to Skift. “We’re also pausing on most summer internship positions (honoring offers already made) and pausing all noncontract internal and external hiring. We’ll continue to evaluate hiring needs on an ongoing basis to determine when it makes sense for the business to resume hiring.”
Southwest’s employee “rallies,” are a company tradition that dates back to 1985 that includes live entertainment and gives employees the opportunity to hear from senior leadership.
“We made a lot of progress in 2024, and we have a lot of tangible momentum … but we’re still far from our goal of returning to industry-leading profit margins,” Jordan wrote in the staff note, according to CNBC. “A key risk in 2025 is acting as if the urgency has passed and therefore not sustaining the focus and energy from 2024.”
A Bitter Battle With Elliott
The bid to cut costs comes after Southwest faced a bitter battle with activist investor Elliott Investment Management. The hedge fund was originally pushing for a leadership overhaul, but both sides ultimately settled on five board seats and let Jordan remain as CEO.
Boeing delivery delays, sustained demand for premium and international travel, and expensive labor contracts have also eaten into Southwest’s profits.
During Southwest’s investor day last year, executives unveiled a turnaround plan that included premium seating, airline partnerships, red-eye flights and capacity cuts in unprofitable areas. So far, Southwest has already cut flights from Atlanta, citing a lack of demand.
Southwest is set to report fourth-quarter earnings January 30.
Watch Southwest CEO, Bob Jordan, at the Skift Aviation Forum 2024:
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Photo Credit: A Southwest Airlines Boeing 737 at Chicago O'Hare International Airport. Vincenzo Pace Vincenzo Pace
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