A Southwest Airlines plane takes off from Hollywood Burbank Airport on July 25, 2024 in Burbank, California.
Mario Tama | Getty Images
Southwest Airlines has warned employees that it’ll must make “difficult decisions” ahead to spice up profits because the carrier faces pressure from activist Elliott Investment Management, which has sought leadership changes at the corporate.
Southwest over the summer announced a number of major changes to its greater than 50-year-old business model to drum up revenue. It plans to ditch open seating for assigned seats, offer seats with more legroom that fetch the next fare and begin red-eye flights.
It has also began allowing its flights to be listed on Google Flights and Kayak and has modified its ads to focus on more younger consumers, COO Andrew Watterson said in a video message to staff last week.
“Now, all that is not enough. We also must change our network,” Watterson said within the video, a transcript of which was seen by CNBC.
“We’ve got a pair of inauspicious decisions heading our way. It is not station closures. But we want to maintain moving the network to assist us drive back to profitability,” Watterson said. “And so I apologize upfront in the event you as a person are affected by it.”
Southwest is not planning to announce furloughs, nevertheless it could cut its footprint in certain cities and staff could transfer to other locations, in response to an individual aware of the matter. The airline is looking for to cut back costs and concentrate on profitable flying, the corporate has said.
Other carriers like JetBlue have cut routes this yr to deploy aircraft on flights that generate higher revenue.
Southwest is about to supply more details about its initiatives and route changes at an investor day this Thursday at its Dallas headquarters.
Elliott has pushed for a leadership change on the airline and has criticized Southwest management for not doing enough to enhance the corporate’s bottom line. Earlier this month, executive chairman and former CEO Gary Kelly said he would step down after the carrier’s shareholder meeting next yr.
Southwest didn’t immediately comment on the staff message. The video was reported earlier by the View from the Wing industry blog.
