Southwest Airlines is halting corporate hiring, promotions, and most of its summer internship programs as part of a cost-cutting strategy aimed at boosting profits, CEO Bob Jordan informed employees in a recent memo.
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Southwest AirlinesSouthwest Airlines Freezes Hiring and Cuts Costs Amid Profitability Push
Southwest Airlines is halting corporate hiring, promotions, and most of its summer internship programs as part of a cost-cutting strategy aimed at boosting profits, CEO Bob Jordan informed employees in a recent memo.
“Every dollar matters as we strive to return to strong financial performance,” Jordan stated in the January 13, 2025 memo, obtained by CNBC. A Southwest spokesperson confirmed the decision, adding that the airline will continue to reassess hiring needs as business conditions evolve.
Scaling Back Longstanding Traditions
In addition to the hiring freeze, Southwest is postponing other activities, including its iconic employee “rallies,” a team-building tradition that has been part of the company’s culture for 40 years.
Jordan acknowledged progress made in 2024 but emphasized that the company is still far from achieving its goal of leading the industry in profit margins. “We’ve built momentum, but there’s still a long way to go,” he noted in the memo.
Investor Pressure and Strategic Shifts
This latest move comes after Southwest reached a resolution with activist investor Elliott Management, which holds an 11% stake in the airline. The airline introduced a three-year “transformational plan” in September 2024, outlining initiatives such as offering assigned seating, premium options, and refining its boarding process while retaining its popular free baggage policy—all aimed at driving revenue and regaining profitability.
However, Elliott Management criticized the plan as overly ambitious and lacking immediate results. The firm accused Jordan of mismanaging shareholders’ resources and dismissed the proposed initiatives as “long-dated promises.”
Calls for Leadership Changes
In October 2024, Elliott escalated its criticism by proposing new leadership and calling for the removal of eight board members. The firm urged shareholders to elect a completely independent and experienced board to better steer the airline toward financial recovery.
A Focused Effort on Recovery
As Southwest navigates these challenges, its focus on cutting costs and streamlining operations reflects its commitment to restoring profitability. While the hiring pause and scaled-back initiatives mark significant cultural and operational changes, they signal a decisive effort to stabilize the airline and address shareholder concerns.
Source: Southwest Airlines
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