Southwest Airlines Co. is currently restructuring its corporate workforce, a move that the company hasn’t made in over 50 years.
The carrier is laying off 15% of its corporate employees and 11 senior leaders in an effort to cut costs and streamline operations. These cuts are estimated to save the company $210 million this year and $300 million in 2026.
“This decision is unprecedented in our 53-year history, and change requires that we make difficult decisions,” Robert Jordan, president and CEO of the airline, said in a statement. “We are at a pivotal moment as we transform Southwest Airlines into a leaner, faster, and more agile organization.”
The cuts will mostly affect those in the Dallas base, the majority of whom will continue working and receiving benefits, bonuses, and a salary until April. Plans to cut jobs came months after the carrier made a settlement with activist investor and shareholder Elliott Investment Management.
Elliott had received five seats on the board after a case settlement but failed to remove Jordan as CEO. However, Southwest Airlines Chairman Gary Kelly plans to retire from the board this year.
Jordan’s leadership was criticized by Elliott, as he was accused of moving too slowly when it came to boosting strategies and profits. The airline once carried more domestic flights than any other airline in the United States. Like many airlines, Southwest lost money during the pandemic but was able to report profits ever since. Since 2021, the airline’s stock price had fallen 50%.
The company has made some changes in recent years to maximize profits. Some of the new changes include dropping the seat-yourself policy, which means that Southwest could charge more for assigned seats, as well as offering premium seating. For the first time in its history, the airline also added red-eye flights.
Its three goals are to minimize cost and maximize efficiencies, boost revenue, and “make the most out of our investment,” the airline said in a statement.
However, financial loss is not all the company has had to face. The airline was sued by the U.S. Department of Transportation and the Department of Justice. The lawsuit was filed due to many of its flights experiencing recurring delays. One specific route — Chicago to Oakland, CA — was late between 59% to 76% of the time.
The DOT also filed a $140 million civil penalty against the airline over the cancellation of 16,900 flights during the 2022 holiday season.
While Southwest Airlines continues to face external and internal challenges, it plans to grow the airline and find ways to boost profits.
