World Stock Watch

Southwest Airlines Takes Drastic Measures to Cut Costs and Boost Profitability

In a bid to return to excellent financial performance, Southwest Airlines is implementing a series of cost-cutting measures, including a pause on corporate hiring and promotions, suspension of most summer internships, and elimination of certain employee team-building events.

A Focus on Frugality

According to CEO Bob Jordan, every single dollar counts in the airline’s quest to improve margins. In a note to staff, Jordan emphasized the need to sustain focus and energy in 2025, warning against complacency. The airline will delay certain activities until it makes sense for the business to resume them.

Traditions Take a Hit

One of the casualties of the cost-cutting measures is the airline’s employee “rallies,” a beloved tradition dating back to 1985. These events, which feature leadership updates, food, and entertainment, will be put on hold.

A Year of Progress, But Still Work to Be Done

Jordan acknowledged the progress made in 2024, but stressed that the airline still has a long way to go to achieve industry-leading profit margins. The company has outlined a plan to increase profits, which includes introducing assigned seating, creating a section with extra legroom, and flying overnight flights.

Tough Decisions Ahead

In September, Southwest slashed flights from Atlanta, resulting in job losses. However, staff were able to apply to work out of other bases. The airline will continue to evaluate hiring needs on an ongoing basis to determine when it makes sense to resume hiring.

Industry Performance

Southwest’s shares have risen 14% over the past 12 months, lagging behind its competitors. United’s shares have surged more than 160%, while Delta Air Lines and American Airlines have seen gains of around 70% and 33%, respectively.

Fourth-Quarter Results Ahead

Southwest will report its fourth-quarter results on January 30. As the airline navigates the challenges of the industry, all eyes will be on its ability to implement its cost-cutting measures and return to profitability.