Southwest Airlines to Lay Off 15% of Corporate Workforce in Cost-Cutting Push
Skift Take
Key Points
- Southwest Airlines plans to lay off 15% of its corporate workforce, marking a significant shift in strategy.
- The layoffs aim to save $210 million in 2025 and $300 million in 2026, following pressure from Elliott Investment Management.
- Southwest is undergoing a turnaround plan including cutting unprofitable routes and adding premium seats to boost profitability.
Summary
Southwest Airlines announced a plan to lay off 15% of its corporate workforce, affecting approximately 1,750 employees, as part of a cost-cutting strategy. This unprecedented move in its 53-year history aims to transform the airline into a leaner and more agile organization, following pressure from activist investor Elliott Investment Management. The company expects to save $210 million in 2025 and $300 million in 2026, as it implements a turnaround plan that includes cutting unprofitable routes and adding premium seats to its cabins.
Southwest Airlines announced Monday that it plans to lay off about 15% of its corporate workforce, or about 1,750 people.
The carrier said the cuts are "almost entirely" on corporate overhead and leadership positions. Eleven senior positions — vice president and above — and 15% of Southwest's senior management committee would be eliminated as part of the restructuring, the company said.
“This decision is unprecedented in our 53-year history, and change requires that we make difficult decisions,” CEO Bob Jordan said in a news release. “We are at a pivotal moment as we transform Southwest Airlines into a leaner, faster, and more agile organization.”
Jordan said in a note addressed to staff on Monday that leadership and noncontract roles should "support our Frontline Employees as efficiently and effectively as possible."
The mass layoffs are the first in Southwest’s 53-year history and signify a change in the carrier's business approach following a battle with activist investor Elliott Investment Management.
“This is a very difficult and monumental shift, and I arrived at this decision after careful and thorough reflection,” Jordan said in the note.
The company said it expected net savings of $210 million in 2025 and $300 million in 2026 from the cuts. Jordan said in the note to staff that the layoffs will start in April, and the layoffs would be significantly complete by the end of the second quarter. Most of the affected employees will continue to receive a salary and benefits while not working.
The cuts come as Southwest is trying to boost its profitability. The carrier announced a hiring freeze last month, affecting mostly corporate roles and summer internships. Last year, Southwest executives also unveiled a turnaround plan that included cutting unprofitable routes, introducing red-eye flights and adding premium seats to its cabins.
Southwest has also been under pressure since Elliott built a nearly $2 billion stake in the company. The activist investor had previously called for a major leadership overhaul at Southwest.
But in September, Southwest and Elliott reached an agreement to add six new directors to Southwest’s board and allow Jordan to keep his job as CEO.
Watch Southwest CEO Bob Jordan at the Skift Aviation Forum 2024:
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Photo Credit: A Southwest Airlines Boeing 737. Vincenzo Pace Vincenzo Pace
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