Southwest Airlines (LUV)’ cost-cutting is taking off in a big way.
The seventh-largest airline in the world by revenue said it would pause corporate hiring and promotions and suspend most summer internships. It also plans to push pause on its employee “rallies,” a team-building tradition that goes back to 1985 and gives staff the chance to hear from senior leadership.
“We are limiting discretionary costs, including holding on the Southwest Rallies for this year, as we focus on reducing costs,” a spokesperson told Quartz in a statement. “We’ll continue to evaluate hiring needs on an ongoing basis to determine when it makes sense for the business to resume hiring.”
Southwest noted that offers already made to summer interns will be honored.
The changes come a few months after Southwest settled a proxy battle with activist investor Elliot Investment Management, which repeatedly criticized the Dallas-based carrier’s leadership last year. The company reported a 65% decline in net income for its third fiscal quarter. It reports earnings for the fourth quarter later this month.
The latest moves follow a series of cost cuts announced in 2024, including multiple rounds of layoffs.
After reporting a $231 million loss for the January to March period, Southwest limited hiring and stopped service to four airports. In September, the company said it would cut more than 300 pilots and flight attendant jobs, along with almost half of the flights that travel through Hartsfield-Jackson Atlanta International Airport.
Last year, Southwest also said it would scrap its decades-old open seating plan, which gives customers the ability to choose any available seat when they board. it also revealed other changes as part of its “modernization efforts,” including premium seating with extra legroom and overnight flights.
“Every single dollar matters as we continue to fight to return to excellent financial performance,” CEO Bob Jordan told staff Monday, according to CNBC, which first reported Southwest’s plans.
Southwest Airlines stock nudged up less than 1% in pre-market trading on Tuesday. The stock has climbed almost 14% over the past 12 months.
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