Southwest Airlines Cuts 15% of Corporate Staff, Affecting 1,750 Jobs, and More
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Southwest Breaks 53-Year No-Layoff Streak With 15% Corporate Staff Layoff
Southwest Airlines has announced its first mass layoffs in 53 years, cutting 1,750 corporate positions (15% of its corporate workforce) as part of a major restructuring plan.
This move comes as we just discussed yesterday about potential merger speculations with JetBlue, Spirit, or Breeze Airways, sparked by a union leader's social media poll last week.
The layoffs will primarily impact corporate overhead and leadership positions, including eleven senior management roles.
Key Points
- Cuts target corporate overhead and leadership positions, including 11 senior executives at VP level or above
- Expected savings of $210 million in 2025 and $300 million in 2026, with one-time charges of $60-80 million for severance
- Layoffs start in April 2025, with most completions by June
- Affected employees will continue receiving salary and benefits without needing to report to work
- The cuts will not affect operational staff like pilots, flight attendants, or ground crew
- CEO Bob Jordan calls it a "monumental shift" toward becoming "leaner, faster, and more agile"
- The stock rose over 2% in premarket trading following the announcement but is down 0.23% today, and it's down 9.44% YTD. The airline's stock has declined by 46.54% in the last 5 years
- Southwest is under intense pressure from activist investor Elliott Investment Management, which took a $1.9 billion stake in June 2024
- This follows earlier cost-cutting measures from November 2024, when buyouts were offered to airport workers
What It Means
The unprecedented layoffs mark a dramatic shift from Southwest's employee-first culture to a more profit-focused approach. The move clearly shows the growing influence of activist investors in reshaping legacy airlines.
While the merger rumors persist, the move suggests more strategic changes ahead.
Keep posted for more updates about Southwest as it happens.
