Southwest Airlines has made a new reduction in the cost of the company to reduce costs
A Southwest Airlines Boeing 737 passenger plane taxis at Ronald Reagan Washington National Airport (DCA) in Arlington, Virginia on December 13, 2024.
Daniel Slim | Afp | Getty Images
Southwest Airlines It is cutting back on corporate hiring and promotions, suspending most summer internships and going without certain team-building events since the 1980s to cut costs and improve profit margins, CEO Bob Jordan told employees.
“Every dollar is important as we continue to fight to return to sound financial performance,” Jordan said in a memo Monday aired by CNBC.
The company said it would delay other activities “when necessary.”
A spokesperson for Southwest confirmed the changes.
“We will continue to evaluate hiring needs on an ongoing basis to determine when it is necessary for the business to continue hiring,” she said in an email.
As part of the cost-cutting drive, Southwest has introduced employee “demonstrations,” a company team-building tradition that began in 1985 where employees hear the year’s goals from airline leaders and are treated to food and entertainment.
Southwest spent months last year under pressure from activist Elliott Investment Management, which called for a CEO change at the carrier. The two sides settled in October, with Elliott winning five of Southwest’s board seats, a lack of oversight and Jordan remaining in the top job.
“We’ve made a lot of progress by 2024, and we have a lot of concrete initiatives…but we’re still a long way from our goal of returning to industry-leading profit margins,” Jordan wrote. “The key risk in 2025 is acting as if the urgency has passed and therefore not sustaining the focus and energy from 2024.”
The airline last year laid out plans to boost profits, including ditching its more than 50-year-old open-seat model in favor of assigned seats and creating more legroom, overnight flights and drastically cutting unprofitable routes.
In September, the company reduced flights from Atlanta, eliminating jobs, although employees can apply to work out of other bases.
Southwest is scheduled to report fourth-quarter results on Jan. 30. The carrier’s shares are up 14 percent over the past 12 months. Uniteds have increased over 160% and are shared. Delta Air Lines And American Airlines They gained about 70% and 33% respectively.
