Southwest Airlines suspends some hiring and internships to reduce costs

Southwest Airlines (LUV) has paused some hiring, internships and employee activities this year as it looks to reduce costs.

“We are limiting discretionary costs, including holding Southwest Rally this year, as we focus on lowering costs,” the company said in a prepared statement Tuesday. “We are also suspending most summer internship positions (to honor those already issued invitation) and suspended all non-contractual internal and external recruitment.”

Southwest said it will continue to evaluate its hiring needs on an ongoing basis to determine when it makes the most sense to restart hiring.

Back in September, Southwest announced it would reshuffle its board of directors and its chairman would retire in 2025, a partial concession from hedge fund Elliott Investment Management, which has been pushing for change at the airline. .

Elliott, a fund led by billionaire investor Paul Singer, already takes a minority stake in Southwest and has advocated for the changes, saying it would improve the company's financial performance and stock price.

The two sides reached a settlement in October. At the time, Southwest said Chairman Gary Kelly and six board members would depart on Nov. 1 and be replaced by five Elliott-backed candidates and a former Chevron executive.

Southwest has been a profit machine for its first 50 years — it had never suffered a full-year loss until the pandemic devastated air travel in 2020. Since then, the company's profitability has been higher than that of American Airlines but well below that of Delta Air Lines and United Airlines.

Southwest Airlines was a scrappy upstart for much of its history. Operating from less congested secondary airports, it allows arriving planes to turn around and take off quickly, carrying a new batch of passengers. It appeals to budget travelers by offering low fares and free changes to reservations or up to two checked bags.

But Southwest now flies to many of the same large airports as its competitors. With the rise of “ultra-low-cost carriers”, its prices tend to be undercut.

Southwest Airlines has announced plans to boost revenue by converting nearly a third of its seats to premium seats with extra legroom as part of an effort to turn around the business. It will also start assigning seats, ending the long-standing practice of letting passengers choose their own seats after boarding. It is also looking to partner with international airlines, starting with Icelandair, to offer destinations outside North and Central America.

In November, the Dallas-based airline offered buyouts and extended furloughs to airport workers to avoid what it called “overstaffing at certain locations,” which it blamed on a shortage of new Boeing planes.

Shares of Southwest Airlines were slightly higher in early trading.