Southwest Airlines Stock Rises After Company Starts First-Ever Mass Layoff Plan

Core Insights - Southwest Airlines plans to cut 15% of its corporate workforce, resulting in approximately 1,750 job eliminations, marking the first significant layoffs in its 53-year history [2][5] - The layoffs are expected to be completed by the end of the second quarter of this year and will include the elimination of 11 senior leadership positions [2][3] - The company anticipates saving $210 million in 2023 and $300 million in 2024 due to these cuts, although it will incur a one-time charge of $60 million to $80 million in the first quarter of 2025 [3] Company Strategy - The decision to lay off employees comes as the company is under pressure from activist investor Elliott Investment Management and aims to transform into a leaner and more agile organization [3][4] - Southwest has already begun restructuring its operations, including the abandonment of its open seating policy, to improve efficiency [4] Financial Performance - Despite being profitable last year, Southwest's earnings were largely driven by co-branded credit card revenue rather than passenger transport [4] - The company's shares have decreased by 10% over the past year, although they rose by about 2% in premarket trading following the announcement of the layoffs [5]