Southwest Airlines is pausing corporate hiring and promotions and will be suspending most of its summer internships to cut costs and improve profits, CEO Bob Jordan said in a message to employees.
“Every single dollar matters as we continue to fight to return to excellent financial performance,” Jordan said in a memo to employees on January 13, 2025, which was seen by CNBC.
A Southwest spokesperson confirmed this decision in an email to CNBC the following day, stating that the airline will “continue to evaluate hiring needs on an ongoing basis to determine when it makes sense for the business to resume hiring.”
Jordan added that the company will postpone other activities. The airline is putting a stop to its employee ‘rallies’, a team-building event that has been held for 40 years.
“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 in the memo.
The new cost-cutting effort follows a resolution with activist investor Elliott Management, which holds approximately an 11% economic interest in the airline. In September 2024, Southwest introduced a three-year “transformational plan” with several initiatives.
These included improving customer experience with assigned seating, offering premium seating, evolving its boarding process with seat assignments, and maintaining its free baggage policy to “to drive revenue growth and return to industry-leading profitability.”
However, Elliott Management cancelled the plan, describing it as “filled with long-dated promises” and accusing Jordan of “playing with shareholders’ money.”
In October 2024, the investor released a statement proposing new leadership and recommending the removal of eight members from Southwest’s board “to give shareholders the opportunity to elect a completely independent, best-in-class slate of director nominees.”
The conflict concluded with an agreement that kept Jordan in charge despite Elliott’s calls for new leadership, according to the company’s statement, released in October 2024. However, the deal granted the appointment of six new independent directors.