Southwest looks to cut costs with buyouts
By TREBOR BANSTETTER
[email protected]
Southwest Airlines is offering voluntary buyouts to 27 percent of its workforce in its latest effort to cut costs, a spokeswoman said Tuesday.
The Dallas-based carrier is offering the deal, which includes $25,000 in severance, some medical and dental benefits and some flight privileges, to about 9,000 employees. The buyouts are available only to workers above a certain pay grade, said spokeswoman Brandy King.
Southwest has been struggling with softer-than-expected revenues and higher costs this summer. Fuel prices, in particular, have had an impact, and the carrier has scaled back its growth plans. The airline is scheduled to report second-quarter earnings tomorrow.
“This is designed to address our cost challenges,” King said.
The airline has offered buyouts once before, in 2004, when most employees had the option of taking the deal. At that time, the airline was downsizing to match operational cuts it had made after Sept. 11, 2001.
The airline has never laid off employees.
King said airline officials worked with union leaders in crafting the buyout package. Employees have until Aug. 10 to decide whether to take the deal.
Shares of Southwest (ticker: LUV) were trading at $15.50, down 13 cents, at mid-morning Tuesday.
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I suppose this is a good thing. Interesting timing, though, with the quarterly earnings release scheduled for tomorrow.