Southwest Airlines (LUV) is reducing service to Atlanta starting in 2025 and cutting more than 300 pilot and flight attendant positions in an effort to save money.
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The changes are being made public a day before Southwest holds its latest Investor Day where it will provide a corporate update. The cuts also come as the airline faces mounting pressure from activist investor Elliott Management.
Southwest has told employees that it plans to eliminate 200 flight attendant positions and as many as 140 pilots beginning in April 2025 as it reduces its number of flights to-and-from Atlanta, which is the world’s busiest airport. The company said some of the impacted staff will be reassigned to other cities.
Activist Pressure on Southwest Airlines
Southwest is under growing pressure from Elliott Management, which has taken a sizable stake in the airline and is demanding changes, including a new CEO and other members of senior management. In July, Southwest announced that it is getting rid of open seating and will offer extra legroom on its airplanes, the biggest changes at the carrier in years.
In August of this year, Elliott Management outlined plans to nominate 10 new directors to Southwest’s 15-person board, including former Air Canada (AC) CEO Robert Milton. Elliott has been pushing hard for current Southwest CEO Robert Jordan and Executive Chairman Gary Kelly to be replaced. So far, the airline’s board has continued to support Jordan and Kelly.
Is LUV Stock a Buy?
Southwest Airlines currently has a consensus Hold rating among 10 Wall Street analysts. That rating is based on three Buy, six Hold and one Sell recommendation made in the last three months. The average price target on LUV stock of $26.73 implies 11.15% downside risk from current levels.
