Southwest Airlines is suspending corporate hiring, promotions and summer internships to cut costs after months of pressure from activist investors.
The Dallas-based airline also discontinued “Southwest Rallys,” a team-building program dating back to 1985 that provided free food and entertainment, and company leaders discussed Southwest Airlines' future vision with employees. talk to members.
“Every penny counts as we continue our fight to return to strong financial performance,” CEO Bob Jordan told employees in a memo on Monday. Obtained by CNBC.
Jordan said the company will postpone other activities “where reasonable.”
The company's stock rose about 1% Tuesday morning.
A Southwest Airlines spokesperson confirmed the airline's move to limit “discretionary expenses.”
She said the airline was suspending most summer internships while honoring offers already made and suspending internal and external hiring.
“We continue to evaluate our hiring needs to determine when it makes sense for companies to resume hiring,” a spokesperson said in a statement.
Mr. Southwest was embroiled in a heated proxy battle for months last year with Elliott Investment Management, an activist investor founded by billionaire Paul Singer.
The feud was resolved in October, when Jordan was allowed to take the reins despite Elliott's calls for new leadership, but the activist fund was given five seats on Southwest's board. It was done.
The deal marks the largest number of seats a hedge fund has ever won in a settlement with a U.S. company.
Mr. Elliott also recently held significant stakes in Starbucks and aerospace and automation company Honeywell International.
Southwest Airlines announced a number of changes last year in an effort to expand its business.
The nearly 60-year-old airline has ditched its signature open-seat model in favor of seat assignments and created more seating options, including more expensive tickets with more legroom. .
The company also began offering overnight flights, cut routes that were less cost-effective, and cut routes out of Atlanta in September.
The move resulted in job cuts, but the airline allowed staff to apply for jobs from other southwestern bases.
Southwest stock is up about 14% over the past 12 months, growing at a slower pace than its industry rivals.
United Airlines' stock price rose nearly 170% during the same period.
Delta Air Lines stock is up about 74% over the past 12 months, while American Airlines' stock is up 33%.
