Southwest Airlines is laying off 15% of its corporate workforce as part of a sweeping effort to reduce overhead costs and become a "leaner" company. The move will impact 1,750 jobs, including 11 senior leadership positions, as the airline seeks to build a "leaner and more agile organization" under its transformational plan.
"We are at a pivotal moment as we transform Southwest Airlines into a leaner, faster, and more agile organization," CEO Bob Jordan said in a statement.
The job cuts primarily affect corporate overhead and leadership roles, including director-level positions. The airline expects most of the separations to be completed by the end of the second fiscal quarter, resulting in an estimated $210 million in savings for fiscal year 2025 and $300 million for the full 2026 fiscal year. However, the company anticipates incurring $60 million to $80 million in severance and post-employment benefits in the first quarter of fiscal 2025.
Southwest has been implementing significant cost-cutting measures, especially after activist investor Elliott Investment Management acquired a $2 billion stake in the airline and urged leadership to take decisive action to improve financial performance.
Last month, the airline announced it would halt certain corporate events, pause some hiring, and suspend most summer internships, though it will honor offers that have already been made. These steps aim to limit discretionary spending as part of a broader financial turnaround effort.
In a January memo to employees, Jordan emphasized the importance of financial discipline, stating, "Every single dollar matters as we continue to fight to return to excellent financial performance," as reported by The Wall Street Journal.
The latest cuts align with Southwest's ongoing multi-year plan to strengthen its finances. Last fall, the company outlined several strategies, including "minimizing hiring, optimizing scheduling efficiency, capitalizing on supply chain opportunities, and improving corporate efficiency." The airline aims to achieve a $500 million run rate in savings by 2027.
Beyond cost-cutting, Southwest is also planning operational changes to enhance customer experience and efficiency. During its investor day in September, the airline revealed plans to introduce assigned seating, evolve its boarding process, and offer premium seating. Additionally, Southwest will begin operating red-eye flights in February to "maximize aircraft utilization" and reduce turnaround time between flights.
As Southwest Airlines navigates these financial and operational changes, the airline remains focused on improving its profitability while maintaining its core customer service values.
