A Southwest Airlines Boeing 737 passenger plane taxis along the tarmac at the Ronald Reagan Washington National Airport (DCA) in Arlington, Virginia on December 13, 2024.
Daniel Slim | Afp | Getty Images
Southwest Airlines is pausing corporate hiring and promotions, suspending most of its summer internships and going without some employee team-building events that date back to the 1980s in order to cut costs and improve margins, CEO Bob Jordan told staff Monday.
“Every single dollar matters as we continue to fight to return to excellent financial performance,” Jordan said in the note, which was seen by CNBC.
He said the company will delay other activities “when it makes sense.”
A Southwest spokeswoman confirmed the changes.
“We’ll continue to evaluate hiring needs on an ongoing basis to determine when it makes sense for the business to resume hiring,” she said in an email.
As part of the cost cuts, Southwest is pausing its employee “rallies,” a company team-building tradition that dates back to 1985 in which staff hear from the airline’s leaders about the year’s goals 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 Southwest board seats, short of control, and Jordan remaining in the top job.
“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,” Jordan wrote. “A 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 charted out a plan to increase profits that includes ditching its more than 50-year-old open seating model in favor of assigned seats and creating a section with extra legroom, flying overnight flights and more aggressively cutting back unprofitable routes.
In September, the company slashed its flights from Atlanta, eliminating jobs, though staff were able to apply to work out of other bases.
Southwest reports fourth-quarter results on Jan. 30. The carrier’s shares are up 14% over the past 12 months, while United‘s are up more than 160% and shares in Delta Air Lines and American Airlines have gained about 70% and 33%, respectively.
