Southwest Airlines has announced a strategic pause on corporate hiring and promotions as part of an extensive cost-cutting initiative designed to enhance profit margins. The airline is also suspending most of its summer internships and forgoing employee team-building events that date back to the 1980s. These measures aim to bolster the company's financial health and align with a new strategy to increase profits.
The airline's comprehensive plan includes a significant shift from its more than 50-year-old open seating model to assigned seating, a move intended to attract a broader customer base. Additionally, Southwest is introducing a section with extra legroom, catering to passengers seeking more comfort during their flights. The carrier is also implementing overnight flights while aggressively trimming unprofitable routes. This strategy saw the airline slash its flights from Atlanta in September, resulting in job cuts, although staff were given opportunities to apply for positions at other bases.
"We made a lot of progress in 2024, and we have a lot of tangible momentum…but we're still far from our goal of returning to industry-leading profit margins," stated Southwest CEO Bob Jordan.
As part of its effort to streamline operations, Southwest is preparing to report its fourth-quarter results on January 30. The company's shares have risen by 14% over the past year, reflecting cautious optimism among investors. However, this growth pales in comparison to United Airlines, whose shares surged more than 160% during the same period.
"Every single dollar matters as we continue to fight to return to excellent financial performance," emphasized Jordan.
Southwest's strategic changes come after months of pressure from activist investor Elliott Investment Management, which advocated for a change in leadership at the airline. The company aims to build on the progress made in 2024 while maintaining focus and energy moving into 2025.
"A key risk in 2025 is acting as if the urgency has passed and therefore not sustaining the focus and energy from 2024," warned Jordan.