Southwest Airlines is implementing cost-cutting measures by pausing some hirings, internships and employee events to lower costs.
The airline is focused on reducing discretionary expenses, including holding off on Southwest Rallies for the year, pausing most summer internship positions and halting all noncontract internal and external hiring.
Driving the news: The company made an announcement back in September that it would be revamping its board and its chairman would retire in 2025 amid pressure from hedge fund Elliott Investment Management.
- Elliott, led by billionaire Paul Singer, has acquired a minority stake in Southwest and pushed for changes to enhance the company’s financial performance and stock price.
- The settlement reached between the two parties in October involved Chairman Gary Kelly and six board members departing to be replaced by five Elliott-backed candidates and a former Chevron executive.
- Southwest Airlines faced financial challenges due to the pandemic in 2020, after being profitable for 50 years. Although remaining more profitable than American Airlines, the company has lagged behind Delta Air Lines and United Airlines.
Go deeper: In a strategic bid to revive its business, Southwest is undertaking initiatives such as converting a third of its seats to premium ones with extra legroom, implementing assigned seating and pursuing partnerships with international airlines to offer destinations beyond North America and Central America.
- The airline offered buyouts and extended leaves of absence to airport workers in November, citing overstaffing in certain locations due to Boeing plane shortages.
