Air travel is one of the most volatile industries in the global economy, and airlines routinely lay off hundreds of employees at once to balance budgets after major upheavals. One exception to this rule has long been Southwest Airlines. The Dallas-based carrier hasn’t laid off any staffers in its more than five-decade history. Even after the 9/11 terrorist attacks when revenue dried up and other airlines initiated mass layoffs, Southwest avoided forced job cuts thanks to employees who donated part of their salaries back to the company. “There was a crusade mentality: It was us against the world,” said Dave Ridley, who spent 27 years at Southwest. “It created a profitability machine.”

But all of that changed last month when Southwest announced its first-ever round of layoffs as it struggles with soaring costs and lagging profits. In February, Southwest laid off 1,750 staffers, which made up about 15 percent of its corporate workforce (not pilots or flight attendants). The airline said the reduction in workforce would save $210 million this year and $300 million next year. The layoffs are part of a major overhaul for the entire airline, which is also ending its famous open seating policy in hopes that customers will pay more to pick their seat. 

Southwest’s financial problems go beyond the pandemic, which caused a collapse and resurgence of travel that left all airlines struggling to navigate a new world. One major disruption is a lack of new planes. Airlines around the world are waiting on the airplane manufacturer Boeing to fulfill orders for new planes — especially the 777X widebody jet it has been promising since 2013. Southwest is on track to get only 25 percent of the new jets it ordered this year. As a result, the airline issued its first mass layoffs, a move that could risk undermining the reputation of a stellar company culture that helped Southwest stand out for the past 53 years. 

Questions: 

1. Why is Southwest laying off employees for the first time in company history?
2. Do you think Southwest’s layoffs will damage the company’s culture? Why or why not?

Source: Chip Cutter and Alison Sider, “Southwest Airlines Promised to Take Care of Employees—Until It Couldn’t,” The Wall Street Journal, March 3, 2025.