Southwest Airlines Announces First Mass Layoffs Amid Investor Pressure
Southwest Airlines is undergoing significant changes as it faces pressure from activist investor Elliott Investment Management. The airline, known for its low-cost model and customer-friendly policies, has announced its first-ever mass layoffs in its 53-year history. Approximately 1,750 corporate jobs, representing 15% of its corporate workforce, will be cut. This move is part of a broader cost-cutting strategy aimed at saving $210 million this year and $300 million in 2025. The layoffs primarily target corporate and management roles, including 11 senior leadership positions, as the airline seeks to streamline operations and reduce redundancies.
The decision comes amid rising labor costs from new union agreements and investor demands for improved profitability. Southwest CEO Bob Jordan emphasized the need for efficiency, stating that the airline must “reduce duplicative efforts” and maintain a lean organizational structure. The airline has also made other changes, such as cutting routes and eliminating its long-standing open seating policy, which allowed passengers to choose their seats without additional fees.
Elliott Investment Management, which holds an 11% stake in Southwest, has been pushing for a leadership overhaul and a strategic review of the company. The hedge fund has called for a special shareholder meeting to replace current management, including CEO Bob Jordan, with new directors who can steer the airline toward better financial performance. Southwest has resisted these efforts, implementing a “poison pill” measure to dilute Elliott’s stake and protect its current leadership.
The airline, once a consistent profit-maker, has struggled to regain sustained profitability since the pandemic. While travel demand remains strong, rising costs and operational challenges have squeezed profit margins. The layoffs and other changes mark a pivotal moment for Southwest as it navigates internal restructuring and external pressures from investors.
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