Southwest Airlines announced it will lay off 15% of its corporate workforce, totaling approximately 1,750 employees, starting in April. The layoffs signal the company's first mass layoffs in its history, targeting senior leadership positions. This decision follows years of financial challenges, including a significant drop in share price, and aims to save $210 million this year. The company anticipates a one-time charge between $60 million to $80 million for severance costs. CEO Bob Jordan stressed the need for increased efficiencies amidst scrutiny from investors, including hedge fund Elliott Investment Management, prompting various operational changes.
The cuts will start in April and include senior leadership, the company announced. Eleven senior leadership positions, which include vice presidents and above, will be eliminated.
As we continue to work together to transform our Company, an area of intense focus will be maximizing efficiencies and minimizing costs.
The shakeup goes beyond corporate leadership. Elliott Investment also pushed for changes that led to the reversal of the airline's open seating policy to assigned seats.
Southwest has had a chaotic few years. Activist investors pointed out last year that the carrier's share price was down more than 50% from early 2021.
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