Southwest Airlines Co is pausing hiring for management, headquarters jobs and outside workers in a new round of cost cuts following a fight with activist shareholder Elliott Investment Management.
The latest changes also include a temporary halt to most internship offers, as well as a suspension of two of the company’s popular annual rallies that celebrate accomplishments and lay out plans for the new year, according to an employee memo from chief executive officer Bob Jordan that was seen by Bloomberg News. “The timing simply isn’t right when we’re striving for cost discipline and focusing on a leaner organization that’s closer to the work, closer to the frontline, and closer to our customers,” Jordan said. “Every single dollar matters as we continue to fight to return to excellent financial performance.”
Southwest already upended parts of its long-term, low-cost business model by deciding to add premium and assigned seats and beginning redeye cross-country flights. The recent battle with Elliott, which argued the airline was slow to respond to changing customer demands and evolving industry trends, also led to a restructuring of the carrier’s board and the ouster of Chairman Gary Kelly.
The airline joins other companies that are taking steps to cut costs, including layoffs. On Tuesday, both handbag and accessories brand Vera Bradley Inc. and Jack Daniel’s maker Brown-Forman Corp said they were taking steps to save money and increase efficiency.
Southwest is grappling with expensive new labour contracts and a slowdown in Boeing Co’s ability to deliver aircraft on schedule, which has increased costs. In November, Southwest offered voluntary buyout packages or extended leaves to airport workers in 18 cities, including Los Angeles and Atlanta.
Alex Macheras
