On Monday (February 17th), Southwest Airlines announced that it will cut approximately 15% of its workforce, which amounts to around 1750 employees. The decision comes as the budget airline aims to reduce costs and streamline its organizational structure.
Southwest Airlines stated that this round of layoffs will also include leadership positions and mentioned that they will eliminate 11 senior leadership roles, accounting for 15% of the company’s senior leadership committee positions.
Bob Jordan, CEO of Southwest Airlines, stated, “This decision is unprecedented in our 53-year history…We are at a critical juncture as we are transforming Southwest Airlines into a leaner, faster, and more flexible organization.”
The company anticipates that the layoffs will be mostly completed by the end of the second quarter, expecting to save $210 million this year and $300 million for the full year of 2026.
Southwest Airlines clarified that the estimated one-time costs of $60 million to $80 million expected to arise in the first quarter of 2025 were not factored into the cost savings calculation.
These layoffs are part of a previously announced plan by Southwest Airlines to address declining profits and improve its balance sheet. In September, the company unveiled a three-year business plan that includes partnerships, vacation packages, and aircraft sale-leaseback arrangements.
Headquartered in Dallas, Texas, Southwest Airlines appointed industry veteran Tom Doxey as the new Chief Financial Officer last week, succeeding Tammy Romo, who announced plans to retire in January next year.
The airline posted fourth-quarter profits last month that exceeded Wall Street’s expectations, attributed to higher ticket prices and strong holiday travel demand.
So far this year, Southwest Airlines’ stock has dropped by approximately 10%, while competitors Delta Air Lines and United Airlines have seen their stock prices rise by over 7%.
(Reference from Reuters)