Dive Brief:

• Budget-friendly airline Southwest will cut its workforce by approximately 1,750 roles, or 15% of corporate positions, in a planned reduction with the goal of paring down operating costs and boosting efficiency, according to a Monday securities filing. The layoffs — reportedly the first-ever involuntary cuts by the company — are focused primarily on senior leadership, according to the company. 
• News of the workforce cuts come approximately a week after the Dallas, Texas-based airline announced Breeze Airways alum Tom Doxey would serve as its next CFO, succeeding current finance chief Tammy Romo in early March.
• “I doubt this is coincidence,” Josh Crist, co-managing partner for Crist Kolder Associates, told CFO Dive regarding the two announcements. Bringing in “a new CFO who is a very strong operator from a cost-conscious carrier is part of a strategy to focus on cost moving forward,” Crist said via email. “I would assume that the company’s new CFO is quite adept at moving the needle when it comes to cost out transformation. That would be my guess as to where Southwest’s strategy sits over the next 12 months.”

Dive Insight:

Romo, a three-decade veteran of Southwest who has served as its finance chief since 2012, announced she would be stepping down from her role as CFO in January. Doxey, an experienced financial executive in the airline industry, is set to take the role March 10, CFO Dive previously reported.

The airline’s move to tap an outside hire as CFO could indicate further long-term change in Southwest’s future, Shawn Cole, president of executive search firm Cowen Partners, told CFO Dive.

“Bringing in an external CFO allows leadership to push tough cost-cutting decisions, while saving face for the CEO,” with the newly-hired leader possibly serving as the “bad guy” in the face of such decisions, Cole said in an email. “In my experience, this also opens the door to more outside hires. It starts with one, signaling a broader shift in strategy. Leadership and the board likely have more tough choices ahead.”

That could include shifts to the company’s senior leadership structure. As part of the layoffs, Southwest will be eliminating 11 senior leadership roles — representing 15% of the airline’s senior management committee, and comprised of vice presidents or executive roles above that level, according to the press release.

The workforce cuts are “unprecedented” in the airline’s 53-year history and come at a “pivotal moment” for the company as it moves forward with a transformational plan aimed at becoming a “leaner, faster and more agile organization,” Southwest CEO, President and Vice Chairman Bob Jordan said in a statement included in the press release.

In September, Southwest announced a multi-year turnaround plan with the aim of achieving a run-rate of $500 million in cost savings in 2027, CFO Dive previously reported.

The airline implemented the plan after seeing its profitability flag in the aftermath of the COVID-19 pandemic, when consumer travel preferences shifted. In targeting the cost savings, the airline highlighted that it would be taking a “hard look” at its cost structure during its Q4 and full-year 2024 earnings call in January, Jordan said at the time.

Southwest expects the layoffs to be complete by Q2 of 2025, according to the filing with the Securities and Exchange Commission. As a result of the reduction, the airline expects to see partial year 2025 savings of about $210 million, as well as full-year 2026 savings of approximately $300 million, according to the filing.  

Southwest did not immediately respond to requests for comment.