Southwest Airlines Layoff Staff For The First Time In Company's History: Over 1500 Jobs To Be Cut By April

Southwest Airlines is making major changes to regain its competitive edge, cutting around 15% of its corporate workforce in a cost-saving move. These layoffs—the first in the airline's history—aim to save millions as the company works to overcome recent challenges.

Announced late on Monday, the job cuts will see approximately 1,750 positions eliminated, including 11 top leadership roles, starting in April. However, pilots and flight attendants will not be affected. Southwest expects to save £166.64 million ($210 million) in 2025 and £238.06 million ($300 million) in 2026.

First-Ever Layoffs

Last week, Barron's pointed out that Southwest was implementing substantial changes due to several challenges. Its stock performance has been weaker than other successful airlines, as recent positive trends for carriers, such as strong travel demand and modern fleets, have mostly helped the established airlines rather than budget carriers.

Furthermore, Southwest is facing government legal action concerning flight delays and involvement from activist investor Elliott Investment Management.

'We are at a pivotal moment as we transform Southwest Airlines into a leaner, faster, and more agile organisation,' CEO Bob Jordan said in a news release. This action follows recent pressure from Elliott Investment Management, which gained five board seats after advocating for leadership changes.

Signs Of Change

The company has always been proud of its never-resorting to involuntary layoffs—not even during major crises like 9/11 and the COVID-19 pandemic—and its special company culture helped it differentiate itself from other airlines.

Notably, the signs were there: Southwest had already stopped hiring pilots and flight attendants for 2024 and halted management recruitment last month. The airline has also changed some unique practices, such as its open seating system.

However, recent difficulties suggest adjustments may be needed: Southwest's stock price has decreased by approximately half since its 2021 peaks and is down about 10% this year. These job cuts are part of Southwest's previously disclosed plan to boost declining profits and strengthen its financial position.

'The Company's multi-year plan is expected to deliver an estimated £396.36 million ($500 million) run rate of cost savings in 2027, by minimising hiring, optimising scheduling efficiency, capitalising on supply chain opportunities, and improving corporate efficiency,' Southwest Airlines said in a news release last year.

A Three-Year Plan

Business Standard reports that in September, the company revealed a three-year business strategy that includes partnerships, vacation packages, and aircraft sale-leaseback transactions. Last week, the Dallas-based airline appointed industry veteran Tom Doxey as its new chief financial officer, succeeding Tammy Romo, who announced her plans to retire in January.

Last month, Southwest announced fourth-quarter earnings that beat Wall Street projections, driven by increased airfares and robust holiday travel demand. 'Southwest Airlines Co. (LUV) reported fourth-quarter 2024 earnings of 56 cents per share, which outpaced the Zacks Consensus Estimate of 45 cents and improved 51.5% from the year-ago reported quarter,' Zacks Equity Research noted in January.

So, despite a profitable holiday season, Southwest is taking decisive action. The 15% corporate job cuts highlight the airline's commitment to its transformation. These changes, while painful, aim to secure long-term financial health and navigate the changing industry. 2 The question now is whether these measures will be enough to restore Southwest's former glory.