Firings in the U.S continue unabated: In a boardroom bloodbath, Southwest Airlines to fire 15% of corporate staff; top brass not to be spared, CEO's memo goes viral

Southwest Airlines scripts history for its first-ever mass layoff. The airline will let go of 15% of its corporate workforce, or roughly 1,750 jobs, as per reports.

Southwest Airlines layoffs to start in April

According to CNN, the layoffs, set to begin in April, will affect several levels of the company, including senior leadership. Eleven senior positions, including vice presidents and above, will be eliminated as part of this major restructuring effort.

Southwest CEO Bob Jordan said “As we continue to work together to transform our Company, an area of intense focus will be maximizing efficiencies and minimizing costs,” as quoted by CNN. He also called the layoffs “a very difficult and monumental shift,” as per the report.


He said the layoffs would help Southwest save around $210 million this year and $300 million in 2026. However, the company will also face one-time severance costs estimated between $60 million to $80 million.

Financial struggles lead to tough choices

This comes after the airline has had to grapple with some heavy financial strains in its recent past. As per reports, Southwest's stock price has declined by over 50% since early 2021.

Southwest's own operational problems have also added to its financial crisis. The airline faced an operational meltdown in late December’s busy holiday travel week. As per CNN, 16,700 flights were cancelled. This was due to the outdated staff scheduling software that made its operations difficult to recover from seasonal bad weather, as per CNN.

This has forced activist investors like Elliott Investment Management to call for a leadership and business model overhaul, reported Business Insider. This activist pressure led to some drastic overhauls of the airline's business model, such as abandoning its long-held open-seating policy for assigned seating, which then enabled it to charge more for such premium options. According to Business Insider, the company also reduced flight crew positions in Atlanta last year to cut costs.

Southwest Airlines leadership changes

The airline has also made several leadership changes, including appointing former president of Breeze Airways Tom Doxey as the new CFO. The previous CFO Tammy Romo and chief administration officer Linda Rutherford will retire from their positions in April 2025, as per CNN.

While Southwest had long prided itself on never layoffs, former CEO Gary Kelly said in a 2021 interview on Yahoo Finance, “It all leads up to a strong desire to take great care of our people and then, in turn, our customers. That’s why we’ve never had a layoff,” as quoted by CNN.

Southwest Airlines isn’t alone in adapting to industry shifts

Southwest Airlines isn't alone in shaking up its strategy, other budget carriers are also adapting to the changing industry.

According to Business Insider, Spirit Airlines is bundling extras like snacks and checked bags to attract premium passengers. JetBlue is delaying the delivery of over 40 jets until 2030. Frontier Airlines has added a business-class-like cabin with a blocked middle seat, to get more customers.

FAQs

How many staff members are going to be laid off?
1,750 corporate workers, or about 15% of Southwest Airlines' corporate staff, will be affected. That number includes jobs at multiple levels, with a few senior management positions, such as vice presidents, also being cut.

What amount will the layoffs save Southwest Airlines?
The layoff will save Southwest Airlines $210 million in 2025 and about $300 million in 2026, as per reports.