DALLAS — Southwest Airlines has initiated a program offering buyouts and extended leaves of absence for airport staff in an attempt to mitigate what it describes as “overstaffing in certain locations.” This decision is being attributed to delays in acquiring new planes from Boeing.
This announcement was made on Monday, coinciding with the pressures placed on Southwest by a hedge fund striving for enhanced profitability and an increase in stock value, which has noticeably decreased since early 2021.
According to a spokesperson for Southwest, the voluntary separation offers are confined to 18 airports, though the specific locations and the number of positions targeted for elimination have not been disclosed. All affected roles fall under ground operations, such as customer service representatives, baggage handlers, and cargo personnel. Notably, pilots and flight attendants are excluded from this buyout option.
Southwest executives have indicated that the airline anticipates concluding this year with a workforce reduction of approximately 2,000 employees compared to the beginning of the year. This follows a significant workforce expansion last year, which saw the number of employees rise from 66,600 to nearly 75,000. It’s important to note that these numbers account for part-time workers as half of a full-time equivalent.
The airline stated in a recent announcement, “Southwest has reduced overall capacity to align with demand given the limitations of our fleet due to aircraft delivery delays. By offering voluntary separation and extended leave to both contract and non-contract personnel, along with sustained slow hiring processes, we aim to prevent overstaffing in select areas.”
Initially, Southwest had anticipated receiving approximately 85 new Boeing 737 jets this year, but due to production issues at Boeing—triggered by an incident involving a panel blowing out of an Alaska Airlines 737 Max in January—that number has been trimmed down to only 20.
The airline’s fleet is exclusively composed of Boeing 737 aircraft, which includes both the Max and its older variants.
In June, Elliott Investment Management started acquiring an 11% stake in Southwest, urging the airline to bolster its financial performance. Last month, the two parties reached a mutual agreement to avert a proxy battle, yet Elliott managed to secure several board positions, allowing them to maintain pressure on CEO Robert Jordan and other leadership.
Prior to Elliott’s involvement, Southwest had already opted to limit hiring and reduce service to various airports as cost-saving measures. Furthermore, the airline has outlined intentions to focus on attracting premium travelers.
On Monday, shares of Southwest saw a 3% increase, contributing to an overall rise of 13% this year. However, this performance lags significantly behind Delta Air Lines, which experienced a 117% increase, and United Airlines, whose shares rose by 58%.