Southwest Airlines (LUV) is making some big changes to fend off a threatened activist takeover. According to recent media reports, the company is cutting routes and jobs.
CNBC (CMCSA) reports that one of the changes is to cut more than 300 pilot and flight attendant positions, in line with previous reports that the company was planning to drastically reduce its workforce.
Bloomberg also reports that the airline plans to nearly halve the number of flights it operates through Hartsfield-Jackson Atlanta International Airport, in line with an industry-wide trend of reducing the number of flights offered in order to increase fares and boost revenue in the long term.
Southwest Airlines says some of the affected workers will be given the opportunity to work in other markets. In a statement to Quartz, it said: “We continue to optimize our network to meet customer demand, optimize our fleet utilization and maximize revenue opportunities. Decisions like this are difficult for our company because of the impact on our employees, but we have been making sure they are taken care of for over 53 years.”
Hedge fund Elliott Management owns an 11 percent stake in Southwest and is trying to use that position to turn things around after a recent period of poor business. Although the company’s current management team is trying to keep control of the airline, Elliott believes shareholders should bring in a new team to take charge.
“Southwest’s management and board of directors have decided to go it alone with the goal of preventing a much-needed change in leadership,” the fund recently wrote in a letter to other shareholders.
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