Southwest Airlines’ decision to lay off 1,750 employees marks a significant shift for the company, which has historically prioritized its worker-first culture. The move is aimed at shoring up profits and reflects the growing influence of activist investor Elliott Investment Management.
Until now, Southwest had avoided mass layoffs and furloughs, even during the industry’s darkest periods. However, soaring costs and sagging profits have forced the company to take drastic action. According to Conor Cunningham, an analyst at Melius, the layoffs are a “monumental shift” that goes against the company’s long-built culture of prioritizing employee happiness.
The move is also seen as a response to pressure from Elliott Investment Management, which currently holds five out of 15 board seats and has called for changes to the company’s business model. CEO Bob Jordan has outlined a strategy aimed at boosting operating margins to at least 10% by 2027, but implementing it will require significant cost-cutting measures.
Southwest’s workforce reduction is expected to save the company $210 million this year and $300 million next year. However, the layoffs have sparked concerns about the impact on employee morale and the company culture that once set Southwest apart from its rivals. As one laid-off employee noted, “Southwest lost so many great people today… I am honestly not sure if the company culture can recover.”
Source: https://www.reuters.com/business/aerospace-defense/southwests-layoffs-dent-its-worker-first-culture-2025-02-19