In an effort to reduce expenses and boost profits, Southwest Airlines is halting corporate recruiting and promotions, discontinuing the majority of its summer internships, and eliminating certain team-building activities for employees that have been a part of the company’s operations since the 1980s, CEO Bob Jordan informed employees.
Jordan stated in the note seen by CNBC on Monday that “every dollar matters as we continue to fight to return to excellent financial performance.”
When it makes sense, he said, the corporation will postpone other initiatives.
The modifications were confirmed by a Southwest spokesperson.
According to an email she sent, “We’ll continue to evaluate hiring needs on an ongoing basis to determine when it makes sense for the business to resume hiring.”
As part of the cost-cutting measures, Southwest is stopping its employee rallies, a team-building event that has been going on since 1985 and where employees are fed and entertained while hearing from airline executives about the company’s goals for the year.
Activist Elliott Investment Management put pressure on Southwest for months last year, demanding that the airline’s CEO be replaced. The two parties reached a settlement in October, with Jordan keeping his top position and Elliott gaining five seats on the Southwest board, short of control.
Jordan added, “We have a lot of tangible momentum and made a lot of progress in 2024, but we’re still far from our goal of returning to industry-leading profit margins.” Acting as though the urgency has passed and failing to maintain the concentration and enthusiasm from 2024 is a major risk in 2025.
Last year, the airline outlined a plan to boost earnings that included operating overnight flights, more aggressively reducing unprofitable routes, and abandoning its more than 50-year-old open seating arrangement in favor of assigned seats and a section with more legroom.
Although employees could seek to work from other sites, the firm eliminated positions in September when it cut flights from Atlanta.
On January 30, Southwest is expected to release its fourth-quarter financial results. nearly the last 12 months, the carrier’s stock has increased by 14%, whereas United Airlines has increased by nearly 160%, and shares of Delta Air Lines and American Airlines have increased by over 70% and 33%, respectively.
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