Southwest Airlines announced Thursday it will reduce its workforce by 2,000 employees and cut service to four airports after posting a major loss to begin the year.
CEO Bob Jordan said in an early morning news release on the company’s first-quarter results that it would adapt and seek growth to end the year and that the changes announced were necessary to achieve that goal.
Southwest lost $231 million — or 39 cents per diluted share — from January to March, the release said. That is compared with a loss of $159 million — or 27 cents per share — loss for the same period in 2023.
“While it is disappointing to incur a first quarter loss, we exited the quarter with healthy profits and margins in the month of March,” Jordan said in a statement.
]Southwest shares had dropped about 8 percent by early Thursday afternoon.
Jordan said the company projects growth of 8 to 9 percent during the second quarter and 4 percent for the year.
But to stop the hemorrhaging, the Dallas-based company said it will end its service at four airports.
Two of them — George Bush Intercontinental in Houston and Cozumel International Airport in Mexico — are major hubs for tourists.
The other two airports for which Southwest will cease operations are Bellingham International Airport in Washington state and Syracuse Hancock International Airport in New York.
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According to the release, higher labor costs were largely responsible for a 5 percent quarterly increase in the airline’s operating expenses per available seat mile, excluding fuel and oil expenses, special items and profit-sharing.
In total, an estimated 2,000 Southwest jobs will be cut, the company said.
Jordan blamed much of the losses on Boeing’s ongoing production and safety issues, which have had the aircraft manufacturer under the microscope all year.
The CEO said he expects Boeing’s issues to affect his company’s growth throughout this year and into next year.
The airline operates a fleet made up exclusively of Boing 737s, according to CNBC.
Southwest had expected to receive 46 of the company’s 737 Max 8 jets to bolster its fleet this year.
It now plans to acquire only 20 of the jets.
Without the replacements, the company said it would hold off on taking some of its older aircraft out of service.
On Thursday’s earnings report, Jordan stated his commitment to ensuring Southwest remains a good investment.
“Achieving our financial goals is an immediate imperative,” he said. “We are reacting and replanning quickly to mitigate the operational and financial impacts while maintaining dependable and reliable flight schedules for our Customers.”
