(Bloomberg) -- Southwest Airlines Co. is ending nearly a third of its flights through Atlanta in an effort to eliminate unprofitable routes, the latest move by the carrier to improve operations amid pressure from an activist investor.
The number of weekly Southwest flights to or from the city will drop to 381 as of April from 567 previously, the carrier said Wednesday. Southwest will serve 21 cities from Atlanta after the changes, down from 37. The pullback is expected to result in more than 300 lost pilot and flight attendant jobs.
The moves — partially offset by expansion in Nashville and new redeye flights connecting Hawaii with the mainland US — expand upon service changes announced earlier this year and other recent steps to revamp the business and bolster performance. The onetime maverick airline is under pressure from activist Elliott Investment Management, Southwest’s second-largest shareholder, to modernize its business and restore profits.
Elliott argues the airline is many years behind rivals in making changes, delays that have hurt financial results and driven down the stock price. It’s seeking to oust Southwest Chief Executive Officer Bob Jordan and overhaul the board.
As many as 200 Atlanta flight attendant jobs are expected to be lost due to the network changes, the carrier said in a memo to employees seen by Bloomberg, with minimal secondary effects on other crew bases. Up to 140 pilot positions will be affected, the Southwest Airlines Pilots Association told its members in an email, calling the changes “a painful piece of news.”
Southwest said it will offer transfers to affected workers and doesn’t plan involuntary layoffs.
“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,” Southwest said in a statement.
Southwest shares were little changed at 9:30 a.m. in New York. The stock rose 3% this year through Tuesday, trailing the broader market.
Southwest moved into Atlanta — the world’s busiest airport in terms of passenger traffic — with the 2011 acquisition of discounter AirTran Holdings Inc. The purchase was intended to fill a hole in Southwest’s route network, but put the airline up against Delta Air Lines Inc. at its large Atlanta hub. Delta’s addition of bare-bones basic economy fares several years ago has helped the premium-focused carrier lure away some cost-conscious customers.
“Even after making changes to our flights in the past, demand for Atlanta doesn’t support our level of flying,” Tiffany Laurent, Atlanta’s inflight base manager, said in the note to flight attendants. “We have to make this change to help drive us back to profitability. As a company, we simply can’t afford continued losses.”
The pilots’ union faulted Southwest executives for the drawdown, saying they have failed to “make or execute” decisions over several years and refused to work with the labor group on possible solutions, according to the email to members.
“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,” union leaders said.
High Costs
The airline is grappling with expensive new labor contracts and a slowdown in Boeing Co.’s ability to deliver aircraft on schedule, which have increased costs. The carrier said in July it would receive just 20 new planes this year, down from an earlier expectation of 79. It won’t get any long-awaited 737 Max 7s, forcing it to delay the retirement of older planes.
Southwest in April said it would end service at four airports that weren’t making money and said it was “significantly restructuring” other markets, including earlier cuts at Atlanta’s Hartsfield-Jackson International and O’Hare International Airport in Chicago. The carrier has said it expanded too much in 2023, and more recently has been hit by a glut of seats across the industry that held down fares and kept airlines from taking full advantage of record summer demand.
Aside from the Atlanta drawdown, Southwest will add redeye flights from Honolulu to Las Vegas and Phoenix; Kahului to Las Vegas and Phoenix; and Kona to Las Vegas. Cities getting Nashville service include Memphis; Albuquerque, New Mexico; and Tulsa, Oklahoma.
(Updates with job loss estimates, pilot union comments beginning in second paragraph)
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