Southwest layoffs: LUV stock price rises as airline slashes corporate workforce in ‘transformational plan’

Southwest Airlines has announced that it will lay off 15% of its employees in an effort to reduce costs and maximize its efficiencies. Here’s what you need to know about Southwest’s layoffs and how employees and fliers will be impacted.

Southwest will cut 1,750 jobs

On Monday, Southwest president and CEO Bob Jordan published a memo announcing that the popular low-cost airline will reduce its workforce by 1,750 positions, which the company says equates to about 15% of its total employees.

Jordan said the move was part of its previously announced “transformational plan.” That plan aims to accomplish three main things, according to Jordan:

• boost revenues
• minimize costs and maximize efficiencies
• get the most from its investments

Jordan says the layoffs will help with the cost minimization and efficiency maximization priorities.

“We must ensure we fund the right work, reduce duplicative efforts, and have a lean organizational structure that drives clarity, pace, and urgency,” Jordan said in the memo. “Improving how we work together and how we get work done has a tremendous impact on our efficiency as a Company and how we deliver against our plan.”

Jordan says that the 1,750 people being laid off will not see their positions go until the end of April. However, he also noted that most employees who will be let go will not continue working until then, though they still will be paid.

Southwest says that it expects the layoffs to save the company approximately $210 million in 2025 and approximately $300 million in 2026. However, it does note that the layoffs mean Southwest will incur a one-time charge of between $60 million and $80 million in the first quarter of 2025, which is due to severance payments and other post-employment benefits.

Are pilots being laid off?

If you’re a regular flier of Southwest, you’re probably wondering how customers will be impacted by the layoffs—particularly whether the airline is letting go of pilots, which could affect trips and their frequency.

But Jordan says the layoffs are “focused almost entirely on Corporate and Leadership positions.” In other words, most operations staff, which includes pilots and flight attendants, will not be affected. 

Southwest says the position affected will also include senior leadership and directors. The airline also confirmed that 11 senior leadership positions from vice president and above will also be eliminated.

LUV stock price rises

While the news of the layoffs is devastating to those losing their jobs, investors seem to see things in a more positive light. As of the time of this writing, Southwest stock (NYSE: LUV) is up over 2% in premarket trading. 

Investors generally view layoffs as favorable, as job cuts are usually one of the fastest ways to cut expenses and increase a company’s bottom line.

However, though LUV stock is currently trading up after the news of the layoffs was announced yesterday, Southwest’s stock price is still down year-to-date.

Since the start of the new year, LUV shares have fallen nearly 10% as of Friday’s close. (Markets were closed yesterday for Presidents’ Day.) Over the past year, LUV shares are down just over 10%. Looking back further, LUV shares have fallen over 47% during the past five years.

Southwest began operations 53 years ago. The company says it currently employs 72,000 full-time-equivalent workers.

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