MW Southwest Airlines to cut 1,750 corporate positions in first nonvoluntary layoffs in 53-year history

By Ciara Linnane

Move comes as airline seeks to cut costs and create a leaner company able to compete

Southwest Airlines Co.'s stock rose 2.4% early Tuesday, after the carrier said it's cutting 1,750 corporate positions, equal to 15% of that group, as it moves to cut costs and create a leaner organization.

The cuts will impact senior leadership and directors, including members of the senior management committee, and are expected to be mostly completed by the end of the second quarter.

"This decision is unprecedented in our 53-year history, and change requires that we make difficult decisions," Chief Executive Bob Jordan said in prepared remarks.

Southwest has prided itself on the fact that it has never had involuntary layoffs - not even after the 9/11 terrorist attacks or the 2008 financial crisis.

"We are at a pivotal moment as we transform Southwest Airlines $(LUV)$ into a leaner, faster and more agile organization," he said.

The company is expecting to book one-time pretax charges of $60 million to $80 million in its fiscal first quarter to cover the costs of the move, which will mostly be for severance and other employment benefits.

It expects partial savings of about $210 million in 2025, followed by $300 million in 2026.

The cuts, which were announced in a regulatory filing late Monday, come as Southwest pushes ahead with a transformation plan that involves wider-ranging changes, such as an end to its hallmark open-seating policy for assigned seats and greater premium-seating options with extra legroom.

The company is under pressure from activist shareholder Elliott Management, which has built an 11% stake and is seeking changes. The company first unveiled the transformation last year after surprising investors with a bigger-than-expected first-quarter loss and revenue that fell short of estimates.

Lower-cost airlines are under pressure from the bigger rivals, which have come out of the pandemic in a stronger financial position and are now benefiting from trends such as demand for premium travel and trans-Atlantic routes.

Southwest has less exposure to those trends and routes.

Read now: Looking for winning airline stocks this year? BofA says to avoid Southwest and JetBlue.

The stock has fallen 10.8% in the year to date, while the US Global JETS exchange-traded fund JETS has gained 29% and the S&P 500 SPX has gained 22.2%.

-Ciara Linnane

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February 18, 2025 06:45 ET (11:45 GMT)

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