Elliott Investment Management Drives Southwest’s Historic 1,750 Job Layoffs

Southwest Airlines (NYSE: LUV), a major player in the aviation sector based in Dallas, Texas, has announced a significant reduction in its corporate workforce. The company plans to lay off 1,750 employees, which represents 15% of its corporate staff.

This move marks the airline’s first major job cuts in its 53-year history. The reduction is aimed at enhancing operational efficiency and aligning with a cost-reduction strategy that could save the airline approximately $210 million this year and around $300 million by 2026.

The layoffs will predominantly affect corporate and leadership roles, with 11 senior leadership positions being eliminated. Previously, the airline attempted to manage its workforce size through voluntary buyouts and extended leave offers to airport workers.

Elliott Investment Management’s Growing Influence on Southwest Airlines

The decision to implement layoffs comes amid pressure from Elliott Investment Management, a hedge fund that has been urging Southwest Airlines to improve its financial performance. Elliott has been advocating for measures to increase profitability and address the airline’s declining stock price, which has decreased by 9.9% this year.

In a strategic move to avoid potential conflicts, Southwest Airlines reached an agreement with Elliott in October, granting the hedge fund several seats on its board. This agreement has given Elliott significant influence over the airline’s leadership and decision-making processes, playing a crucial role in the current restructuring efforts.

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LUV Gains on Firm’s Cost-Cutting Measures

Southwest Airlines stock saw an uptick on the news of the cost-cutting measure. At the time of writing the stock was up over 2% in the trading session. YTD, the stock is down 6.35%. The current price-to-earnings ratio for LUV are 40.99 and the TTM EPS is $0.76.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.