Southwest Airlines will terminate operations at four airports and reduce its workforce by 2,000 employees in response to ongoing financial challenges and Boeing’s aircraft delivery delays. On Thursday, CEO Bob Jordan issued a statement detailing the airline’s cost-cutting measures.
The airline will cease service to Cozumel International Airport in Mexico, Syracuse Hancock International Airport in New York, Bellingham International Airport in Washington, and George Bush Intercontinental Airport in Houston.
The layoffs, anticipated to be managed through attrition rather than furloughs or layoffs, result from the airline’s restructuring efforts and a disappointing financial performance in the first quarter of 2024. Southwest reported a loss of $231 million, citing increased labor costs and higher operational expenses due to delayed aircraft deliveries. That poor report comes even as demand for air travel continues to rebound from the effects of the COVID-19 pandemic.
Southwest Airlines to Drop 4 Airports, Slash 2,000 Jobs https://t.co/QQMTiGXJhO
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Jordan’s statement read: “While it is disappointing to incur a first-quarter loss, we exited the quarter with healthy profits and margins in March. We are focused on controlling what we can control and have already taken swift action to address our financial underperformance and adjust for revised aircraft delivery expectations. The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025.”
Southwest’s strategy also includes adjustments to its aircraft acquisition plans. The airline expects to receive only 20 new 737 Max 8 jets from Boeing this year, a significant reduction from the 46 initially planned. This adjustment is necessary as Boeing struggles with its production challenges, which were marked notably by a January incident involving a cabin panel blowout during a flight operated by Alaska Airlines.
The airline has also implemented cost control measures such as limiting hiring to essential roles and encouraging employees to take voluntary time off. These efforts are part of a larger goal to enhance productivity and manage discretionary spending effectively.
Southwest’s decision to cut jobs and cease operations at several airports is part of a broader trend in the airline industry. Carriers are forced to adapt to changing economic conditions and unexpected challenges like those presented by Boeing’s manufacturing delays and service issues.
Southwest’s stock price (LUV) fell by nearly 10% in pre-market trading on Thursday and was off by 7.55% for the week in early trading on Friday.
