We’ve had reason to believe that Southwest Airlines would be making a big announcement, and we now have the details of what it is.
Continue reading: Wow: Southwest Airlines Plans Layoffs, First In Company’s History
Share your questions, experiences, and thoughts below.
I really thought this was going to be another business model change. But this is a sad day for Southwest, which will never be the same; expect morale to drop permanently from what used to be a happy airline
I doubt any in the C-Suite will be impacted...isn't that how it usually works!!
Let's be very clear.
Neither Jon nor Ben or Gary or any of the other people that speculated about what WN would announce said it would be mass corporate layoffs.
This is a sad day for WN esp. in light of its history.
It is equally sad that WN HDQ employees will be given a virtual meeting to learn their future and that everyone is locked out of the building for now.
There couldn't be a more cold approach to handling this.
Sad, sad day.
Why there a memo circulating on Reddit about Southwest acquiring Jetblue? It says from CEO Bob Jordan???
It's also shocking how quickly WN's workforce has grown. They had 60,000 employees pre-covid and are up to 72,000 now.
The fact that they can lay off 1750 out of roughly 10,000 leadership and corporate employees shows they have grown heavy.
Companies always like to pretend they're a family til it becomes inconvenient.
What does "corporate position" mean? Is that anyone who is not at an airport, and works in an office building? Does that include reservations staff for example?
Zero vision or strategy for American business except next quarter's earnings, come what may.
I retired last summer after almost 25 years. Much of the blame can be attributed to Gary Madoff Kelly and his concerted effort to place corporate shareholders over employees. He help destroy the culture. This really ramped up with the whole Airtran fiasco.
Difficult not to see these PE vultures ripping the copper wiring out of Southwest from the DOGE kids scrapping our state for parts. Extremely sad time to be an American right now.
"Neither Jon nor Ben or Gary or any of the other people that speculated about what WN would announce said it would be mass corporate layoffs."
You are so OBVIOUSLY seeeeeething with jealousy, at how people hang on their words, but never yours.
LOL, this is hilarious to watch.
Typical corporate bullshit.
"I know this will be hard, but we will get through it together."
Sure. It won't be hard for you, boss. Just for the peons. So no worries.
No wonder everyone hates corporations. This is exactly why you should never place your loyalty to any company, for their loyalty is only to their bottom line. And there are folks surprised Luigi Mangione took his anger on one big company?
It's a cultural thing that's taken many decades to accomplish. For 70yrs+, since the peak of the Cold War, "capitalism" has become synonymous with culture-Americana.
Thus, to question capitalism, is to question America/patriotism. No matter how much capitalism lurched toward the outright pillaging of companies for short-term gain. We're still seeing the effects today. Look at Boeing.
Clearly Bob Jordan is out of his depth, and just following orders from the PE crowd at this point. No company has ever cut its way to greatness. And, if it’s a race to the bottom, they may want to check out how Spirit and Frontier are faring. Southwest needs a vision and strategy for the future.
Hey buddy, don’t say that. Tim is very relevant and credible in the aviation community. In fact, here’s a list of very important and relevant people that are interested in what he has to say:
1. Tim Dunn
End of list
The comments are unnecessarily harsh.
There's no way to sugarcoat the situation, so it's best to be honest, as challenging as it is.
What language would y'all suggest as the alternative? What corporate approach would you suggest as the alternative? And be real and not mindless with the response.
If truly thoughtful, let's see how the reorg affects the HO operation and structure.
In all industries, a periodic review of structure is essential. It's not just the aviation industry.
And if the new strategy and structure works...the tens of thousands of employees that flourish with WN will be grateful.
and yet you hang on every word I wrote.
And I was dead right when I said a couple days ago to let WN announce what it was going to announce.
No one dreamed it would be anything this bad - and it sure had nothing to do with mergers or partnerships.
"and yet you hang on every word I wrote."
Yeah, as free entertainment. For that, it's gold.
For aviation news and analysis, not so much.
"What language would y'all suggest as the alternative?"
Not that difficult really, just tell the truth and be done with it:
"The company is reducing employment levels, in order to meet its cost/revenue goals set out in ____ plan."
There. Just say that. People just find that "We're a family, and this hurts me as much as it hurts you" kind of bullsh|t to be grating and insulting. It's so fake and unnecessary. Painfully so. Especially when it's coming from some guy, who everyone realizes is going to walk away from this with an 8 figure golden parachute, stock bonuses, etc.
Its so stupid that Idiot investment Management will end up ruining an otherwise decent airline, then they will just sell up and leave.
I am not at all glossing over the enormous pain that WN employees are going through but note the numbers I provided below.
WN has added 12,000 employees since the end of 2019 for a 20% increase in employees.
Their ASMs have increased 7%.
It doesn't take an expert to realize that WN's employee numbers have grown far faster than the amount of capacity they are adding.
And since their profits have fallen dramatically, anyone has to look at what is driving the decrease in profitability.
WN - and most companies - don't break down employee numbers by dept. but WN had 15% of its employees in leadership or corporate jobs. That is a high percentage of employees.
it is a shame that anyone had to tell WN management that they were getting too many employees but sometimes it takes an outsider to tell you that things aren't right.
Tell us how much Delta and United made from their frequent flyer program and how much Southwest made from theirs.
Alrighty.
Not the usual, but I fully agree with with Tim Dunn.
Let's think about the larger workforce that is being saved by this difficult decision.
Carl Icahn pulled this shit for Blackberry (get cash flow positive and ebitda) and made his money then tanked the stock. Southwest should be investing in growth strategies to get CF positive, not engaging in practices that could gift Delta/United/American (especially American given HQ location) access to high quality talent. Bad move.
Has WIN tried other methods to reduce employment levels - holds on non-vital hiring, early retirement, or buy-outs?
I'll just note that the visual of "What do you make of the Southwest layoffs?" immediately above a picture of the flipped-over, smoking Delta plane is one heck of a visual. Seems like your website already has opinions on this one!
So, as a starting note, Southwest isn't losing money - they're just "not making enough money". I do wish they would/could have told the folks at Elliott "If you are dissatisfied with the performance of our stock, you should perhaps invest in the following other companies more suited to your goals..."
That being said, as a business owner the first thing to go should be a large portion of my salary/bonus combo. Not enough to put me in the poorhouse, but I certainly shouldn't be taking a bonus under these circumstances unless I was brought in to do this. I know that's not how corporate folks think, but that should be the first line item taking a whack.
After that, I'd do a partial hiring freeze - obviously there are areas where you can't stop hiring (e.g. agents at airports you're adding/expanding ops) but others where you could do this for 6-12 months without a major impact.
Next, I'd offer buyouts to folks in areas where a freeze isn't likely to be sufficient. I'd be clear about the targets I was shooting for, but I'd be trying to make as much of this voluntary as possible (and this might well come with the added advantage of some higher-seniority employees nearing/at retirement taking a buyout, which can easily be worth more than one equivalent less-senior employee getting laid off).
And then...you see where that gets you, and maybe /then/ you do layoffs.
I don't have any particular knowledge of Southwest corporate structure, but I'm guessing it does not include reservations. "Corporate" is usually synonymous with "salaried", so think middle management types. Reservations is typically considered a frontline position similar to gate agents, flight attendants, rampers, etc.
Yeah, lately I've been thinking a lot about Luigi Mangione.
Expect more like him coming for the corporate shits that rule over us all.
Haven't been on a full SW flight since summer of last year, on routes that have traditionally always been full. Probably because their prices are just so high, it doesn't make any sense. I fly them for work at least once monthly and this is my observation out of MCI, where SW is by far the leading airline.
I’m disappointed how this blog has became political. Shame on a person, but he is capitalist so he won’t stop even tho he will suck every left wing dick and blow Cairo to go get cheap seats under table. USA the best and move away if you don’t like it. Plus. Don’t change our lives, stay in your place. And get back to the purpose of blog. Soon, you’re obsolete. Hope you sell it soon before it’s too late and ur working at AA ticket counter. And fyi. This person better like trumps bc just wait on taxes owed on credit card points buried in bills. Was passed again last week. One line in 8000 page bill. Go find it. But worth 1 trillion too USA and back over 15 years on people that got sign up bonuses on more 1 card year. And on kick back referrals. Your time is over. Go Donald.
Bummer. Too bad their jobs weren't with the government. "60 Minutes" would have done an entire special on their job losses as if losing your job has never happened to anyone ever before.
lol
End stage capitalism. At least the rich will get richer before the end, that's all that really matters
1750 out of 72,000 employees is 2.5% of the workforce, and the hits are in corporate, not operational folks. I think the company culture will survive. Delta survived Ron Allen’s “Leadership 7.5” in the early 90’s, which cut 11,500 people out of a workforce of 70,000. Up until that time, Delta also prided itself on never having laid off an employee. Of course it took Delta years to recover operationally because Allen did a hatchet job on the company, cutting heavily in customer facing roles. It sounds like Bob Jordan read that case study and doesn’t plan to make the same mistake.
Few get rich investing in airlines. Southwest stock is down year over year, while the S&P is significantly up.
Southwest has significantly underperformed DAL, UA, and the S&P. If it wasn't for Elliott, Southwest leadership would be continuing as business as usual. Elliott wouldn't be getting change with its minority stake if other Southwest investors where happy with the company's performance.
Southwest is cutting 2.5% of its total workforce. Companies routinely revaluate roles and responsibilities and the need for headcount. It's not a race to the bottom.
There is plenty of bloat and inneficiency in the federal government. The Defense Department hasn't been able to pass an audit in 8 years. You maybe happy with business as usual, but a lot of the electorate feels the government bueracracy which didn't even have to be in the office, needs change.
Notice that the business offices will be closed the day the employees receive their termination notices.
Must be the Luigi Mangione effect!!
“ And I was dead right when I said a couple days ago to let WN announce what it was going to announce.”
Tim admitting he never has anything to say when others do so just listen to him for nothing.
Tim you were right about nothing. You just wrote 1000 paragraphs about how jealous you are of of Ben and JonNyc while the rest of us watched and laughed
Layoffs really stink. But it's sadly amusing to me to read the opinions of those who likely haven't ever experienced a job loss like this. In 28 years of professional tech work (granted, most has been at startups) I've been laid off 4 times. I've never gotten the payout that these WN employees will get, full everything for 2+months and likely some severance as well with no requirement to continue to work during that time. Usually I've gotten 2 weeks of severance plus up to 40 hours PTO paid out. And I've always been fine. So ease up, job loss happens and things will work out for these people.
As for the tone in these memos there's really no good way for company leadership to handle things like this. Again, get over it
Companion pass is the only thing bringing me back at this point. And I'm almost tired enough of WN that I might quit going for it. I'll requalify for comp pass next week so we'll see how the next 2 years shake out
Welcome to the world of MBAs ruining everything. It's sad that a company that used to pride themselves with no layoffs is now having layoffs. Not sure what Southwest is now meant to be. A legacy without first class?
"Full everything" for 2 months is the law. Either they're kept on the property (remember Texas is a concealed carry state!) Or the corporation has to pay.
For your future reference: "The Worker Adjustment and Retraining Notification (WARN) Act requires most employers with 100 or more employees to provide 60 calendar days' notice before a plant closing or mass layoff, or face potential penalties. "
Unpopular opinion:
Layoffs are never easy or fun but Southwest needed these layoffs. Anyone who has ever known a Southwest Corporate employee could tell you how entrenched their culture is of "Herb knew best. why should we change?" At times, to an outsider, it seemed cliche and cute, but it often came across as lazy and lacking vision, especially to new people that arrived in recent years somewhat astounded by the culture of "herb knew best; Gary keeps messing it up". By no means would I ever claim I saw this situation coming in 2018 as that culture permeated Southwest, but looking back with some degree of hindsight, it doesn't seem that surprising. Southwest had happily settled into the middle position of the industry, not a ULCC, not an international network carrier with little impetus to innovate. They relied on some VERY good real estate assets built over decades to retain measured profitability but even those advantages ran out as the network carriers got smarter about competing.
Unfortunately, Herb's Southwest just doesn't seem to work anymore. You can blame it on labor costs, inability to generate sufficient revenue (a seeming lack of dynamic pricing that never made sense to me), a p2p model that doesn't work as well anymore... you could blame it on, a lot, but the fact of the matter is their culture needed a massive jolt to get people to realize the old "herb did it this way, no need to change" mentality wasn't going to work anymore.
The stories of IT Failures over DECADES at Southwest are more than documented enough to realize how many of their leaders, hired during a time of "Pax Southwesticana" simply didn't have the experience to lead Southwest with much ingenuity. There's nothing wrong with a 1970s era IT infrastructure if it works today, but even Southwest has known for a while that it didn't and hadn't been able to permeate their own culture to fix it for fear of losing "who we are" (over simplification, yes).
Whether you like Redeye flights or you don't, the fact that WN COULDN'T do them for so long says a lot.
I really like Southwest as a company. I think the saddest part for them right now is that it took an outside entity to come in and tell their leaders (not the majority of their corporate employees) that Herb is dead. Move on.
All the best to Southwest corporate friends today. Most of you have so many great ideas to move the company forward retaining aspects of its history. I hope your new leadership allows ingenuity.
I'm still not sure how Southwest is leaving the undesired middle of the industry even with their current plans, but I hope their plans work for them.
Here's one harsh reality. Airlines have way too much unprofitable flying. They at least at this point can make up for it with partner, particularly credit card, income. Also ancillary revenue to a lesser extent. There may well be a rightsizing of flying and if that happens layoffs will be massive.
This is the fundamental problem Spirit is having. Ancillary revenue doesn't make up for the money the airline loses on the base fare.
I agree that Southwest needed to make changes but not necessarily all of these changes and not in the manner that some of these changes are being made.
We have seen this story before: outside firm (e.g. Elliott) takes an ownership position and then strongarms the company into changes that juice the stock price in the short term at the expense of long term success, employees, customers, and company culture. The outside firm walks away with a huge profit on their "investment" and the target company is left far weaker.
Is this comment satire? Impartial reporting of aviation industry news is not 'political'?
It seems like this action is destroying one of the key assets of the company (its culture) but is not building out a path to growth and greater profitability. There appear to be fundamental questions in key areas that are not addressed: Network (is flying P2P from ?secondary? airports a viable strategy); Schedule (red-eye aside, what are the other ways to optimise the schedule); Pricing (is the Revenue Management optimised; what are the options in relation to miles and credit cards); Proposition (which consumers are willing to pay more when they get more; what is the 'more' that they value).
No one would claim that it's easy. Evolving the Southwest model that was very effective for many decades (and was admired by airlines all over the world) is going to take great skill. But it's clear that it's no longer as effective as it once was given consumer and industry changes.
well, to be clear. I'm not saying that I agree with destroying the WN Balance Sheet in exchange for a couple stock buybacks.
But I do think it took Elliott to remind their corporate culture that Herb isn't going to give you the answers you need in a dream or vision.
one of the best things you have written, Max., esp. the last two paragraphs.
The WN of 2019 wasn't Herb's WN. It had become fat, inefficient, and slow to respond to the market.
and, WN has settled w/ all of their labor groups at higher wages, long before AA and UA have completed the process. WN has borne much higher labor costs long before the revenue they need is coming in.
This is a sad day but WN has a bright future. 2025 will see a significant upturn in WN's profitability and employee pride in a new but different WN from the past.
again, well done, Max,
I'm not sure what you have missed but WN has laid out its transformation from a revenue standpoint including network, schedule, pricing and RM and proposition.
They haven't addressed personnel costs other than higher pay for unionized groups.
"destroying culture" lol, this is 2025 no one cares about culture anymore even employees would rather just work from home than have some stupid office wide party or functions where culture is built. Half these people let go probably havent stepped foot inside HQ in over 3 years anyways.
It is a great time to be an American right now as the majority of americans voted in someone who is actually changing the government to waste less and become more sustainable. Too bad you have been brainwashed to think sustainable means something else though.
Sadly amusing? I too have been laid off a few times and I call tell you it is a traumatic experience. And, my husbanc worked for start-ups and was laid off a couple of times. But he points out that when you join a start-up the trade-offs are far different than when choosing to work for a larger company. Start ups typically promise an IPO pot of gold as the lure to balance the known lack of job insecurity associated with emerging firms. And, they typically lack sufficient resources to deploy their scarce capital for generous severance packages. Also, the black mark of redundancy is much less with starts up as most everyone knows layoffs happen all the time even to very talented folks. This is far different. It may true for many of these people SW was the only employer they have known for most, if not all, of their professional lives. At least initially, that type of separation can be crushing. I feel for these folks.
Exactly, i dont see the big deal, they realized they dont need 1000 people who work from home so they are letting them go, how is this a big story?
"Network (is flying P2P from ?secondary? airports a viable strategy"
Southwest has long since gotten away from that. They've kept the secondary gateways where they already had critical mass, but they're now in LaGuardia, San Francisco, Reagan, Boston, Miami, O'Hare, etc, and have been for quite some time.
I don't condone what was done, but I do agree 100% with the notion that "Luigi was just the first of many to come," with the way things are going.
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Was the AirTran acquisition maybe a mistake?
Layoffs are what established legacies and risky start-ups who have fallen on hard times do.
I guess with the ditching of open seating and the adding of un-egalitarian separate but more equal cabins, Southwest is just not quite the same place it used to be. Looking back, maybe the decision to not adopt AirTran’s business model or even ATA’s advanced Hawaiian operations, can only be looked upon as a majorly flawed opportunity in hindsight, as WN navigates its way forward.
This: "The focus is on making shareholders happy right now, at the expense of employees" is a sad truth for most of Big Corporate America, and it's always to the detriment of society.
Those stock buybacks they'll do with the "savings" are ephemeral (or vanish entirely if the market is in a mood). Imagine if they instead gave that as bonuses to rank-and-file with a little extra vacation time- thereby expanding their own business in the future. Sadly, the quarterly results for the "activist shareholder" are all that matter. And that the executives take home their bonuses.
Also broadly speaking, that "lockout and you don't know if you're still employed until you have a zoom session" will leave scars on any possible trust for years to come. The absolute worst way to treat your "team". Since it's pretty clear now that they were never considered a team.
Elliott is behind this. They are going to ruin Southwest. They will become just another airline which is so sad. We have flown nothing but Southwest domestically for probably 25 years. Sadly, it seems we will soon need to look at alternatives.
I hate the term activist investor - it should really be "activist extractor." We know they will gut the company, get their share, and then depart the ruins.
Next up, I predict their survey results will say that 85% of loyal SW customers want bag fees!