By Alison Sider

Southwest Airlines is slated to shed 15% of its corporate workforce, eliminating about 1,750 jobs in an effort to cut costs and streamline the carrier's operations.

The cuts are a first for Southwest, which hadn't previously conducted a mass layoff in its 53-year history. They mark one of the most tangible signs of a shift in the airline's practices after a battle with activist investor Elliott Investment Management last year.

Even as rival airlines and companies across industries have culled staff in tough times, the company avoided broad forced job cuts during economic recessions, as well as after the Sept. 11, 2001, terrorist attacks and during the Covid-19 pandemic. The track record has been a point of pride among executives and engendered loyalty within its workforce.

But after a hiring spree in recent years, the airline -- long known for keeping costs down -- has been facing pressure from investors to rein in expenses. Even as the appetite for travel has surged, the airline's labor costs have increased -- in part because of new agreements with unions. Other inflationary pressures have weighed on its profit margins.

Chief Executive Bob Jordan said cutting staff is a "difficult and monumental shift," but corporate overhead has been growing faster than the rest of the airline's operation.

"We must ensure we fund the right work, reduce duplicative efforts, and have a lean organizational structure that drives clarity, pace, and urgency," Jordan wrote in a message to employees.

Eleven senior leadership positions will be eliminated in the broader thinning of the company's corporate workforce. The airline estimated that the restructuring will save $210 million this year and $300 million next year.

The separations will take effect in late April. Until then, the carrier said, most of the affected employees will continue to receive salaries, benefits and bonuses while not working.

The cuts won't affect front-line workers such as pilots and flight attendants.

Southwest's cost-cutting drive is part of a turnaround plan that includes changes to its longstanding business model, such as assigning seats and selling rows with extra legroom.

Many of the new initiatives are aimed at drumming up more revenue by appealing to fliers with a taste for a fancier flying experience and those who have been turned off by the airline's hallmark open-seating policy.

But those changes won't start to pay off right away. Meanwhile, the carrier is slowing down its growth, pruning its network and embracing leaner operations to bolster its financial performance.

The airline last month said it would freeze hiring and promotions and pause most summer internships. It canceled rallies typically held in cities around its network to communicate with and celebrate far-flung employees -- a tradition it has held for decades.

With a shortfall of new planes being delivered from Boeing, the airline offered voluntary buyouts and extended leaves of absence last year to employees at several airports where it said it was overstaffed.

To make better use of its existing fleet, the airline is trying to reduce the amount of time planes sit on the ground between flights. This month it operated its first red-eye flights, allowing it to increase the use of its planes and bring in additional sales.

Southwest also has been looking to make money from its existing fleet and planes on order from Boeing, including entering a deal last month to sell 36 planes to another company and lease them back.

Write to Alison Sider at alison.sider@wsj.com

(END) Dow Jones Newswires

February 17, 2025 18:30 ET (23:30 GMT)

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