Southwest is pausing some hiring and internships as the airline looks to reduce costs

Southwest Airlines (LUV) is hitting the pause button on some hiring, internships and employee events this year as the company looks to reduce costs.

“We are limiting discretionary costs, including hosting the Southwest Rallies for this year, as we focus on reducing costs,” the company said in a prepared statement Tuesday. “We are also pausing most summer internships (honoring offers already made) and pausing all non-contract internal and external hiring.”

Southwest said it will continue to evaluate its hiring needs on an ongoing basis to determine when it makes the most sense to rehire.

Back in September Southwest announced it would renew its board and retire its chairman in 2025, in a partial concession to hedge funds Elliott investment managementthat has pushed for changes at the airline.

Elliott, the fund led by billionaire investor Paul Singer, has built a minority stake in Southwest and advocated changes it says will improve the company’s financial performance and stock price.

The two sides reached an agreement settlement in October. At the time, Southwest said Chairman Gary Kelly and six board members would leave on Nov. 1 and be replaced by five Elliott-backed candidates and a former Chevron executive.

Southwest was a profit machine for its first 50 years — it never posted a full annual loss until the pandemic crushed air travel in 2020. Since then, the company has become more profitable than American Airlines, but much less than Delta Air Lines and United. Airlines.

Southwest was a scrappy upstart for much of its history. It operated from less busy secondary airports, where it could turn around arriving aircraft and take off quickly with a new group of passengers. It appealed to budget-conscious travelers by offering low rates and no fees for changing a reservation or checking in up to two suitcases.

But Southwest now flies to many of the same major airports as its rivals. With the rise of ‘ultra-low-cost carriers’ the price is often undermined.

As part of its efforts to turn around the company, Southwest announced this plans to increase revenues by converting almost a third of the seats to premium seats with extra legroom. That will be the case start assigning seats – ending the old practice of letting passengers choose their own seat after boarding the plane. And it is pursuing partnerships with international airlines, starting with Icelandair, to serve destinations beyond North America and Central America.

In November, the Dallas-based airline made an offer buy up and extended furloughs for airport workers to avoid what she called “overcrowding at certain locations,” which she blamed on a shortage of new planes from Boeing.

Shares of Southwest rose slightly in morning trading.