DALLAS – Southwest Airlines plans to eliminate about one-third of its flights to Atlanta next year to save money as it comes under pressure from a hedge fund to increase profits and boost the airline’s stock price.
The retreat in Atlanta, where Southwest is far smaller than Delta Air Lines, will eliminate more than 300 jobs for pilots and flight attendants, although they will have a chance to relocate, according to the company.
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A Southwest official said Wednesday the airline needs to cut unprofitable routes, and “demand for Atlanta doesn't support our level of flying.”
While the airline's planners “try everything they can before making hard decisions like this one, we have to make this change to help drive us back to profitability,” the Atlanta-based official, Tiffany Laurent, said in a memo to employees.
Shares of Dallas-based Southwest fell 4.6%.
Southwest executives are expected to detail other changes that it plans to make when it holds an investor meeting Thursday. The session is in response to Elliott Investment Management’s campaign to shake up Southwest’s leadership and reverse a decline in profits over the past three years.
Southwest will cut 58 flights per day and reduce its presence at Hartsfield-Jackson Atlanta International Airport from 18 to 11 gates, according to the Southwest Airlines Pilots Association, which says the news is painful for Atlanta-based employees.
“It is simply amazing that the airline with the strongest network in the history of our industry is now retreating in a major market because this management group has failed to evolve and innovate,” the union said in a memo to pilots.
Bill Bernal, president of the Transport Workers Union local representing Southwest flight attendants, said his union is outraged by the reduction of Atlanta jobs. He said Southwest assured the union that it would grow in Atlanta.
“This is gaslighting at its finest,” Bernal said in a memo to union members. "Yet again, flight attendants are paying the price for poor management decisions.”
A Southwest spokesperson responded, “Decisions like these are difficult for our company because of the effects on our people, but we have a history of more than 53 years of ensuring they are taken care of.”
While retreating in Atlanta, Southwest published its schedule through next June on Wednesday, and it includes new routes between Nashville and six other cities along with five new red-eye flights from Hawaii to Las Vegas and Phoenix. Those additions start in April.
Earlier this year, Southwest pulled out of four smaller markets and announced it would limit hiring in response to weakening financial results and delays in getting new planes from Boeing.
More notably, CEO Robert Jordan said in July that Southwest will begin assigning passengers to seats and set aside nearly one-third of its seats for premium service with more legroom.