Jamie Spencer
Southwest Airlines said Monday it will cut 15% of its corporate workforce, or 1,750 people — marking the first mass layoffs in the company’s history.
Details of the Workforce Reduction
The layoffs, starting in April, will impact senior leadership, including 11 executive positions at the vice president level and above. The company expects these cuts to save $210 million in 2025 and $300 million in 2026, while incurring a one-time charge between $60 million and $80 million for severance and other costs.
“As we continue to work together to transform our company, an area of intense focus will be maximizing efficiencies and minimizing costs,” said Southwest CEO Bob Jordan in a note to employees. He described the layoffs as “a very difficult and monumental shift.”
Southwest’s Recent Challenges
Southwest has faced turbulence in recent years, with activist investors highlighting that the airline’s stock price had fallen more than 50% from early 2021. Despite exceeding analyst expectations in its latest earnings report, the carrier’s financial performance has relied heavily on rising airfares.
In June 2024, hedge fund Elliott Investment Management took a $1.9 billion stake in the airline, calling for leadership and operational changes. The company has since named a new chief financial officer, Tom Doxey, replacing Tammy Romo, who will retire in April 2025 alongside Chief Administration Officer Linda Rutherford.
Operational and Policy Changes
In response to investor pressure, Southwest reversed its long-standing open seating policy in favor of assigned seating, allowing for premium seat pricing. The airline also faced scrutiny after an operational meltdown in December, which saw 16,700 flights canceled due to outdated staff scheduling software and severe weather disruptions.
A Departure from Tradition
As recently as 2021, Southwest prided itself on never implementing layoffs. Former CEO Gary Kelly once stated, “It all leads up to a strong desire to take great care of our people and then, in turn, our customers. That’s why we’ve never had a layoff.”
Southwest’s restructuring reflects the evolving airline industry landscape, driven by financial pressures and investor demands. Whether these strategic shifts will restore confidence and stability remains to be seen.
