DALLAS (AP) — Southwest Airlines is offering airport workers bribes and furloughs to avoid what it calls “overstaffing in certain locations” that is causing a shortage of Boeing Co.’s new planes.
Monday’s move comes as hedge funds are pressuring Southwest to increase profits and boost its stock price, which has plummeted since the beginning of 2021.
A Southwest Airlines spokesperson said the “voluntary separation” offer is limited to 18 airports. The company did not identify the airports or say how many jobs it hopes to eliminate.
All of the jobs targeted are ground-based, including customer service agents, baggage handlers and cargo workers. Pilots and flight attendants are not included in the deal, a spokeswoman said.
Southwest officials said the Dallas-based airline plans to end this year with 2,000 fewer employees than it started with. This comes after Southwest’s workforce grew from 66,600 to nearly 75,000 last year. Part-time workers are counted as 1/2.
“Due to aircraft delivery delays, Southwest Airlines has reduced overall capacity to meet demand with a constrained fleet,” the airline said in a statement. “In addition to the continued slowdown in hiring, offering voluntary separations and furloughs to contract and non-contract employees will help avoid overstaffing in certain locations.”
Southwest Airlines initially expected to build around 85 new Boeing 737s this year, but after a panel erupted from the side of an Alaska Airlines 737 MAX during a flight in January, Boeing decided not to manufacture them. Due to the above problems, the number was reduced to 20.
Southwest Airlines’ fleet consists solely of Boeing 737s, including Max and older versions of the aircraft.
Hedge fund Elliott Investment Management has acquired an 11% stake in Southwest Airlines since June, pushing the airline to improve its financial performance. Although the two sides reached a truce last month to avoid a proxy fight, Mr. Elliott has won multiple seats on Southwest’s board of directors, which he could use to replace CEO Robert Jordan ( CEO and other executives can be kept under pressure.
Even before Elliott, Southwest Airlines had limited hiring and suspended flights to some airports to save money. It also announced plans to target premium travelers.
Southwest stock rose 3% on Monday and is up 13% this year. This is significantly lower than Delta Air Lines’ 117% increase and United Airlines’ 58% increase.
