Southwest Airlines is cutting almost a third of its flights to and from Atlanta in a blow to the city and staff based there.
It comes just days after the carrier warned that it will have to make some ‘difficult decisions’ in coming days under a plan to restore profits.
The cuts to flights, announced in a memo on Wednesday morning, comes as the future of its passenger-friendly policies are under threat.
Changes will cut the number of workers needed in Atlanta, but there will be no job losses. Staff will have to relocate to another hub.
Flights to or from the city will fall from 567 per week to 361 as of April, the airline said Wednesday. Cities serves will drop from 37 to 21.
The airlines is desperately trying to cut costs as they battle Elliott Investment Management, a powerful hedge fund that has amassed a ten percent stake in the carrier. Elliott is demanding measures to cut costs and boost profits.
Already, Southwest has said it is axing its popular open seating policy after half a century. Instead, it will soon charge passengers a fee to pick a seat.
As well as a change of management, Elliott is demanding that Southwest’s iconic ‘bags fly free’ perk is ditched – as the activist investor says charging for baggage will bring in tens of millions of dollars in revenue.
Southwest Airlines has warned that it will have to make some ‘difficult decisions’ in coming days under a plan to restore profits
This changes to the schedule comes ahead of an investor day on Thursday.
CEO Bob where Jordan is expected to outline a plan to restore the carrier’s long-term profitability – a standard investors came to expect from the airline before the pandemic.
The proposed changes include plans to switch to assigned seating and extra-legroom seating.
That move was first announced earlier in the summer – but tomorrow Jordan will explain how Southwest will roll it out.
It will involve higher-margin offerings that competitors like Delta and United Airlines embraced years ago.
The new steps will be announced during an investor day in Dallas, as investors like Elliott fight to oust CEO Bob Jordan and instill a new board with its own nominees.
Southwest, which once boasted a record 47 consecutive years of profit prior to the pandemic, is currently struggling to regain sustained profitability. Interviews with analysts, investors, and workers suggest that the airline’s long-running success may have led to overconfidence and stubbornness among its leaders.
‘They have been far too ingrown and … far too smitten with ‘we’ve got to do it the Southwest way,” said Rob Britton, a professor at Georgetown University.
In response to the criticisms, a Southwest spokesperson said the company typically does not make a decision unless there is data to support it.
‘Throughout its history, Southwest has been very deliberate in decision making when it comes to the markets it serves and its business model,’ the spokesperson said.
The carrier has already pulled passenger-friendly policies like open seating, as it attempts to fend off changes demanded by activist Elliott Investment Management
The new steps will be announced during an investor day in Dallas, as investors like Elliott look to oust CEO Bob Jordan and instill a new board with its own nominees
Elliott, one of the airline’s biggest investors, has claimed the company’s business model has failed to address shifting demands in the consumer sphere for more premium products.
Elliott has said Jordan and Southwest’s soon to be former Chairman Gary Kelly have refused to adapt the airline’s business model, hence the recent changes after Kelly stepped down on September 10.
A report out earlier this year showed how airlines including Delta, United and American pocketed a staggering $33.3 billion from just baggage fees last year – a sharp 15 percent rise from $29 billion in 2022.
This sum is solely made up of fees from larger carry-on bags, standard checked baggage fees, and fines for overweight or extra large checked bags and accounted for 4.1 percent of global airline revenue last year.
