Southwest announces mass layoffs

Southwest Airlines yesterday announced it’s cutting 1,750 jobs (~15% of its corporate workforce), as it works to trim costs. It marks the airline’s first mass layoffs in its 53-year history.

• The move is expected to generate net savings of ~$210 million this year and $300 million next year.

A turbulent time

The cuts follow a prolonged battle with activist investor Elliott Management (who now has six board seats), and come as Southwest is trying to boost its profitability.

This profit-push involves ditching its longstanding free-for-all seating method for assigned seating and adding redeye flights to squeeze more use out of its planes. The company also implemented a hiring freeze last month, and put an end to team-building “rallies,” a company tradition that dated back to 1985.

📸 Big picture: Southwest’s profit-push could also be referred to as a “premium-push.” Many of the company’s new initiatives are aimed at appealing to those willing to shell out cash for a more elevated flying experience, a segment of the market that’s boosted profits and revenues at other airlines such as American, Delta, and United.