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- [00:10]
Narrator / David Brown
It's the dark of night, October 2023 in the Colorado Rockies. Two miles above sea level on the top of Copper Mountain, a gentle snow begins to fall. It won't be gentle for long. The snowfall is part of an early winter storm, and that storm is marching east toward Denver International Airport There. Southwest Airlines officials have been nervously awaiting this storm for days, and that's because they've spent months and tens of millions of dollars shoring up those defenses after the company's epic meltdown a year ago. Just before Christmas in 2022, a winter storm slammed into Denver International and quickly spread east. Southwest was overwhelmed. The airline lacked enough winter gear like de icing trucks to fight back against the frigid conditions. And when combined with their completely outdated crew scheduling software, the airline went into a tailspin. Southwest canceled nearly 17,000 flights and stranded 2 million passengers over nine days before it fully recovered. The meltdown prompted a congressional inquiry, public outcry and an impending Department of Transportation fine. Southwest vowed to shore up its winter operations and its scheduling software. And as dawn breaks over Denver International, Southwest is about to find out if it's ready. Last year, Southwest found itself outgunned not just by the storm, but by but also its competitors here in Denver. United had nearly twice as many de icing trucks per plane as Southwest. This year, though, Southwest has bolstered its brigade, adding 15 more de icing trucks. As Southwest's planes taxi away from gates, the de icing crews roll into position. A ground crew leader nicknamed Iceman gives the okay for another crew member to get into the bucket of the truck's cherry picker.
- [02:17]
Bob Jordan
Yeah, we got one taxiing over so.
- [02:19]
Narrator / David Brown
You can get in the bucket. The plane is blasted with a heated propylene glycol mix. Southwest has purchased an additional 400,000 gallons of that ice clearing solvent since its meltdown last winter. The airline also invested in hundreds of engine covers that keep snow out of engine interiors. And it's bought a bunch of high powered outdoor heaters to keep keep equipment like jet bridges from freezing in cold weather. It's also upgraded its maligned crew scheduling software and hired dozens of new crew schedulers and brought on hundreds of new workers here in Denver and other cold weather cities. That investment did not come cheap. Neither did last year's meltdown. The cascading cancellations last Christmas cost Southwest $800 million in lost revenue and in customer refunds. The airline took another $350 million hit early in 2023 as Flyers stayed away from Southwest and as the first storm of the season hits Denver. Southwest is negotiating a $140 million settlement for its Christmas failings with the Department of Transportation. Add it all up and the meltdown's price tag is more than a billion dollars. That's a huge hit to the Talk about expensive lessons. When your operations crash, the price tag's bigger than what the news media reports. How do you calculate the cost of lost trust, Congressional scrutiny, or those viral posts online? A billion dollar meltdown shows how neglecting back end systems, something like crew scheduling, can snowball into a full blown crisis. You know, you can sweat the boring stuff before it breaks, or spend 10 times as much trying to rebuild when it does. But even with what could have been terminal delays in fixing what's wrong, there's a payoff in getting it right. Southwest weathers this newest storm with minimal disruption. And weeks later, on Thanksgiving, when snow falls across the Midwest and Northeast, Southwest doesn't cancel a single flight. But while Southwest's winter woes may be behind it, it's about to find out that it still lacks something. Passengers really want a seat of their own as business owners and managers, you use software for your business every day. You use one piece of software to manage your customers, another to manage your employees, another to manage your finances. The list goes on. You buy these pieces independently and hope they fit neatly together like a puzzle. And then you find out the hard way that they don't, and you end up with a mess at the heart of your business operations. Does any of this sound familiar? Well, fortunately, Zoho offers a solution to this chaos. It's called Zoho One. Zoho One is a suite of around 50 pre integrated business applications that fit together beautifully. So instead of dealing with disparate software from multiple vendors with multiple contracts and price points, you deal with one vendor with all the pieces of the business software puzzle neatly put together, offered at a very attractive price. Now if this sounds interesting to you, you gotta check out Zoho 1 at Zoho 1, that's Z O H O dot 1E. With Zoho, you're not just licensing apps, you're licensing peace of mind. This message is brought to you by Apple Card. Did you know Apple Card is designed to help you pay off your balance faster with smart payment suggestions? And because fees don't help you, Apple Card doesn't have any. So if your credit card isn't Apple Card, maybe it should be subject to credit approval. Apple Card issued by Goldman Sachs Bank USA Salt Lake City Branch. Variable APRs range from 18.2.4% to 28.49% based on creditworthiness rates as of July 1, 2025 terms and more@applecard.com from Wondering. I'm David Brown, and this is Business War. In our last episode, Southwest's leaders failed to heed warnings from Frontline staff who insisted that the airline didn't have the right tools to deal with a big storm. When that big storm came, the frontliners were proven right. Southwest's operational meltdown during the 2022 holiday season stranded 2 million passengers and strained relations with its biggest unions. Now Southwest's pilots and flight attendants are demanding better pay and a bigger voice inside the company. And that's just one of the problems on Southwest CEO Bob Jordan's radar. As 2023 ends, Southwest's costs are climbing. Its profits, they're descending. Jordan now faces a pivotal decision. Does Southwest chart a new direction or does it stay the course? He has billions and billions of reasons to maintain the airline's current flight path. For five decades, Southwest Airlines has set itself apart with operational reliability, low fares, financial stability and a certain esprit de corps between management, employees and customers. Those factors have made it the most consistently profitable airline in the whole industry. While a lot of other airlines have gone bust, Southwest has made billions in profits by doing things its own way. But the pressure to change from passengers, employees and investors, that's building. The question now is will Southwest make the kinds of changes that generate lift or will its changes induce a stall? This is episode two excess baggage. It's December 2023 on Wall Street, Southwest CEO Bob Jordan has joined CNBC on the trading floor of the New York Stock Exchange. The opening bell won't ring for another 15 minutes, but in pre market trading, Southwest stock is up. That has not been the norm since last year's Christmas meltdown. Southwest shares are down almost 23%. Still, Jordan is beaming brighter than the Christmas lights that decorate the trading floor. He's pleased with the airline's improved winter performance and with the fact that it has hired more than 20,000 new employees since he took over as CEO in 2022. He's also grinning on camera over a deal Southwest just inked to buy more than 100 Boeing 737 Max jets.
- [09:51]
Bob Jordan
I'm really proud of our team this year. We got a new order with Boeing. We got all of our jets flying. We're staffed, and I'm just really proud of all the accomplishments. And we are taking a lot of momentum into 2024.
- [10:05]
Narrator / David Brown
In fact, when the new year arrives, Boeing will suffer a blowout, and Southwest will hit serious turbulence. It's January 2024 in Dallas, an office building near Dallas's Love Field. The president of Southwest Airlines flight attendants union, Lynn Montgomery, answers an incoming Microsoft Teams call. The call is from an election technology company that has been counting votes from Southwest's flight attendants nationwide. The question on the ballot is do the flight attendants want to authorize a strike against Southwest? Montgomery has a pretty good idea of what the tally will show. She's been flying with Southwest for three decades, and although she loves her job and loves her passengers, she's fallen out of love with Southwest, which once billed itself as the Love Airline. Montgomery and thousands of other flight attendants have gone more than five years without a new contract. Those years included the pandemic where flight attendants took a beating, sometimes literally, as they dealt with increasingly unruly passengers. Now they want higher pay and better working conditions. In December 2023, just as Southwest was hoping it would get through the holidays without another meltdown, the airline offered its flight attendants a new deal with 20% raises. But when the flight attendants learned that Southwest pilots would get an even sweeter deal, almost 30% more in pay, the flight attendants rejected the offer. Now they're taking their first ever vote on whether to strike. That same move seemed to pay off for Southwest pilots. Last year, the pilots okayed a strike for the first time in Southwest's five decade history. Soon after, the pilots got the deal they'd been looking for. It included a $400 million contract signing bonus for all union members. The bonus provides the pilots with retroactive raises for the years they worked without a contract. Montgomery would like to see a similar number for her flight attendants. Her eyes widen as the results of the flight attendant vote pop up on her screen. The vote is overwhelming. 98% of all flight attendants have said yes to a strike. If they go through with that strike, it'll stop Southwest cold. It's April 2024 at Dallas's Love Field Airport. A stone faced Southwest Airlines CEO Bob Jordan stands on a roof deck at the airline's headquarters. The deck overlooks the airport's runways and terminal. There, a couple of Southwest Airlines Boeing 737s taxi toward runways, preparing for takeoff. As they do, the airline stock takes a dive. That's why Jordan looks so grim after losing money in the fourth quarter. Thanks in part to that big bonus it paid its pilots, Southwest just reported more dismal financial numbers. Southwest lost $230 million in the first quarter of 2024. That loss comes even though Southwest had record first quarter revenues of $6.3 billion. And the next quarter might be just as bad. That will reflect a big upcoming cost. The $364 million bonus Southwest just yesterday agreed to pay to its flight attendants for signing a new contract that averted a strike. Peace has not come cheap. Southwest's flight attendants got a 22% raise as part of their new deal. They're now the highest paid in the industry. And Southwest has another big problem. It doesn't have enough planes for all those better paid pilots. And flight attendants blame that on Boeing. Three months ago, a door plug on a Boeing 737 Max 9 operated by Alaska Airlines blew out during a flight. The plane landed safely, but the incident has done serious damage to Boeing. The Federal Aviation Administration has amped up its safety checks on the jet maker because of the blowout, and that slowed Boeing's production roll. Back in January, Southwest was expecting to accept 85 new Boeing 737 Maxs by March. Southwest cut that number almost in half to 46. Now in April, Southwest trimmed its estimate again down to just 20 planes. Without those new planes, Southwest needs to get more mileage out of its older jets. And older jets, just like older cars, need more maintenance. That's taking a bite out of Southwest's bottom line, as Jordan explains live on cnbc.
- [15:09]
Bob Jordan
Regardless, now, the Boeing delays are very painful. They cause us to replan. They hurt us on the revenue front. That causes us to be inefficient, and we're working all of that.
- [15:19]
Narrator / David Brown
As Jordan speaks, shares keep tumbling. They're down more than 9% on the day. Past couple of years have been worse. With the stock down more than 40%, Jordan needs to figure out how to get more lift for Southwest's financial wings. He starts by cutting back on the airline's forward thrust. Jordan tells CNBC viewers that the airline is ending a breakneck expansion that it began just before Jordan took over as CEO in early 2022. Jordan had made that expansion a key priority. He led the airline to hire more than 20,000 people and added multiple new destinations. Hey, look, I get it. Most companies dream of scale, but there's a fine line between growth and overreach, right? Southwest expanded like it was still flying in the 2010s. The boom times. Not in a post pandemic world with grounded jets and testy unions. Growth without the right resources is like adding passengers to a plane with no extra fuel. Looks great till you run out of Runway. It was all too Much too fast. And as of today, Southwest is shrinking its flight network. It's also shrinking heads. A Southwest jet roars into landing as Jordan shouts out an explanation on tv.
- [16:43]
Bob Jordan
We have stopped and frozen nearly all hiring. We have voluntary programs underway and we expect to end 2024, 2000 heads below 2023, and we'll be down again in 2025. And through our voluntary time off programs, right now, we're already seeing nearly a thousand employees take those, take those programs.
- [17:05]
Narrator / David Brown
As it racked up consecutive profits over the decades from 1973 to 2020 and even again from 2021 to 2023, Southwest has never had a mass layoff. That was even true during the pandemic. In October 2020 alone, American and United furloughed 32,000 people combined. Southwest reduced staff, too, but only through voluntary exits. Even before Bob Jordan arrived at Southwest in 1988, the airline approached layoffs as a measure of last resort. Southwest prided itself as something of a do gooder in that way. It believed it was doing good for its employees as well as for the American flying public. It even dubbed itself as a, quote, symbol of freedom. And the airline has just rolled out a new ad campaign that Southwest says is all about quoting here, freedom and flexibility. The ad tout Southwest's no change fee policies and its two free checked bag allowance for every passenger. One of the spots features a vacationing traveler who draws attention for his wild mane of hair. The mop top traveler explains himself to a stranger on the street. I checked two bags on Southwest for free. I pack a lot of shampoo.
- [18:24]
Nick Cannon
Can't get this with 3 ounces. This is full bottle, baby.
- [18:29]
Narrator / David Brown
Those free bags, just one of the offerings Southwest has that most other carriers don't. Still, as Jordan stands viewing those runways at Love Field, Southwest is perched in a precarious position. With pricey new union contracts, it can't afford to match the fares of ultra low cost carriers like Spirit. And while it offers free bags, it doesn't have the money making perks like premium seating that legacy carriers like United have. And that's left Southwest feeling like it's stuck in a middle seat. And now Bob Jordan has a choice. He can settle for the middle or he can pay for an upgrade. Actually, scratch that. His choice is to either stay in the middle or find out if his customers are willing to pay to fly on an upgraded Southwest Airlines. And as Jordan will soon discover, not all Southwest flyers are ready to pay for a better ride. After telling hundreds of stories about business battles throughout history, I'VE learned one constant truth. 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It's a good time to check in and see where we are on this journey. So it's the spring of 2024 and Southwest isn't the only low cost carrier suffering because of problems with planes. Spirit and JetBlue are also cutting flights and that's carving into profits because of an issue with a specific aircraft engine. Spirit and JetBlue were already way off course after both posted net losses in 2023. The two airlines tried a merger, though it wasn't cleared for takeoff by regulators who scuttled the $3.8 billion deal in 2024. Meanwhile, all the major US legacy carriers, American, United, and Delta, they're raking in cash. United made $2.6 billion in 2023. That's more than three times what it made a year earlier. American's revenue that same year? Around 53 billion, the most in its 93 year history. And Delta, Well, Delta made a bigger profit than American and United combined. It's now the nation's most profitable airline. The reason for that is something we talked about in our last episode. Remember when we said that after the pandemic, air travelers seemed to want more than just a cheap seat? Well, the legacy airlines have lots of premium seats, at a price, of course. Extra legroom, front of the plane. Oh, lots of other perks for sale, too, like airport lounges and premium loyalty programs, to say nothing of flights all over the place. Globe budget carriers like Southwest, not so much. Unless. Well, unless Southwest decides to follow suit. And they're now thinking along those lines. What can we sell? But this way of thinking, it goes against one of their key strengths, the perception of the value proposition. And structurally, Southwest has one key advantage. They're not so eager to change. Unlike legacy airlines that fly small and big jets from a range of manufacturers, Southwest uses just one type of plane. You know, when Southwest sent its first official flight barreling down the Runway at Dallas's Love field back in 1971, the plane it used was a Boeing 737 in 2024. That tradition hasn't changed. It's the largest single aircraft fleet in. In the whole world. And that, along with its free bags policy, these aren't just quirks. This is cost control with a friendly face. Southwest figures one type of plane saves money by simplifying pilot training, maintenance, and ground handling. And by standardizing the boarding process across the fleet. Oh, yeah, about that boarding process. That's another one of Southwest's unique quirks. In April 2024, Southwest still has no assigned seats. Instead, passengers get on and grab whatever seat they can find. And every seat is the same, other than the exit row. No extra legroom here. And no first class either. That open seat policy incentivized passengers to get their butts into the best seats. Fast and faster boarding made for less time on the ground and more wiggle room to hit scheduled arrival times. That's important because Southwest's business model relies on its people and planes being perceived as more productive than the competition. Still, Southwest's boarding system has been derisively characterized as a cattle call. But Southwest has rounded up a profitability record that's unmatched by any other major carrier, thanks to this combination of quirks. But now Southwest is fighting financial headwinds, and it's doing so just as winds of change are blowing across the airline industry. Those seating perks that Southwest doesn't have are really taking off with consumers. And while Southwest holds the line on free bags, competitors like JetBlue and Spirit and American and Delta are stuffing their pockets with billions of dollars in bag fees. That's got some insiders at Southwest as well as some outside investors asking a critical question. Has Southwest's uniqueness become its weakness? That question is about to shake Southwest to its core. And as that shake up comes, some Southwest passengers will get rattled and rolled. It's June in Oklahoma. Just after midnight, a Southwest flight crew guides their 737 toward landing at Oklahoma City's Will Rogers International Airport. In the suburb of Yukon, Oklahoma, one resident is drifting off to sleep. He's rattled awake by the sounds of jet engines. The resident jumps out of bed and heads to a nearby window. There, he's shocked to see a low flying commercial jet. He's looking at Southwest Airlines Flight 4069. It's inbound to Will Rogers from Las Vegas and it's just 525ft off the ground even though the Runway is still eight miles away. An alarm sounds in the control tower at Will Rogers. An air traffic controller contacts the Southwest bridge plane to calmly warn that it's far too low. Southwest 4069 low altitude alert. You good out there? Yeah, we're going around 4069. The pilots throttle up their engines, further shaking the residents of Yukon. The flight quickly ascends to 3,000ft. Minutes later, it's safely on the ground. But for Southwest, more instability is to come. Foreign It's July in Tampa, Florida. Southwest Airlines Flight 425 from Columbus, Ohio is on approach to Tampa International Airport on a cold, wet, windy afternoon. Four miles out from the airport, the flight is being buffeted by winds. A passenger looks out the window and realizes the plane is far too low. She repeatedly texts her husband with one word, abort. She's in fear for her life. The plane is just 150ft above Tampa Bay and just 150ft above a causeway connecting Clearwater, Florida to Tampa. The flight should be more than a thousand feet higher this far from the airport. Air traffic control calls the Southwest Pilots and Southwest425 loss alert. Check your round the warning comes in time. The flight ascends, circles the airport and lands safely. But the incident gets plenty of news coverage. It's the fourth Southwest flight this year to get that kind of attention. Along with a flight in Oklahoma. A Southwest flight to Hawaii got within 400ft of the ocean before pulling up. And a flight from Phoenix to Oakland experienced a strange bobbling in flight known as a Dutch roll. Even though no one is hurt in any of the incidents, they all come at a bad moment for Southwest as the second quarter ends. Southwest reports that it's back in the black from the first quarter, but its profits are half what they were a year earlier. Costs are still on the rise and Boeing is still behind on deliveries. And now an activist investor has just purchased a multi million dollar ticket to ride on Southwest whether the airline likes it or not. It's July 2024 in Dallas. @ Southwest's headquarters, Bob Jordan is about to go in front of cameras again. He adjusts the lapels on his steel gray checkered blazer. Hanging behind him is a model Armada. Metal mockups of Southwest's jets hang from the ceiling. Freedom One, the American flag style jet, is just to Jordan's left. But today there are questions over whether Southwest is still free to run its own company. A month before Southwest released its second quarter numbers, one of the most feared investors in the world, Elliott Investment Management, quietly took advantage of Southwest's lagging stock price to take about an 11% stake in the airline. Hey, you remember Elliot from our Starbucks season. They took a big stake in that company, which put pressure on the Starbucks board to bring in a new exciting CEO to lead a turnaround. Well, Elliott wants Bob Jordan fired and it wants Southwest to change how it does business. Elliott has called for the airline to end its 52 year history of open seating in favor of revenue generating assigned seats. Today, Jordan announces that Southwest will do just that. Not, he says, because Elliott demanded it, but because the airline's leadership thinks it's time that Southwest caught up with the competition and with the needs of its own customers. When Southwest surveyed those customers about what they wanted, they said they wanted something Southwest didn't have. Assigned seats.
- [31:54]
Bob Jordan
This is what our customers want. 80% of customers that fly Southwest today want an assigned seat. 86% of customers that don't fly Southwest want an assigned seat. And when a customer defects from Southwest to another competitor, it's the number one reason. So it's the right thing at the right time.
- [32:11]
Narrator / David Brown
Still, Jordan acknowledges that not everyone will be happy with such a major move. And he's right about that. On TikTok, Southwest's change has met with skepticism. I feel like the open seating policy was one of the main reasons people use Southwest Airlines. So I don't know if this is a good move or a bad move. Another Tiktoker thinks Southwest's changes suggests the airline is losing its way. Southwest is going through an identity crisis because who do they think they are? That's a pretty good question. If Southwest is no longer the open seating airline, then exactly what is it? What makes Southwest special anymore? We're about to find out.
- [32:57]
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- [33:42]
Lindsey Graham
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- [34:50]
Narrator / David Brown
It's September 2024 in Dallas at Southwest Headquarters. CEO Bob Jordan is about to preside over the most important meeting of his career. A crowd makes their way toward a small auditorium at Southwest's Love Field headquarters, where Jordan will speak. The crowd includes representatives of Southwest's biggest institutional investors. Stock analysts are here too, as are members of the business press. They've all come for the unveiling of Jordan's multi part strategy for rerouting Southwest's financial flight plan. As the invitees head through the corridor, they're greeted by a photo of legendary Southwest CEO Herb Kelleher. The photo covers an entire wall. The late Kelleher was known for chain smoking and swilling. Wild Turkey is often described as a merry prankster. Southwest has put a large red button beside Kelleher's photo labeled Laughter Launch, and many in the group can't resist pushing it. Despite Kelleher's canned laughter, the mood is tense. For the past three months, the activist investor group Elliott Investment Management has clamored for change at Southwest. Elliott contends that Southwest can boost its lagging share price by firing Bob Jordan and much of his management team. But today, Jordan intends to prove them wrong. The fifth 63 year old hops up onto a stage.
- [36:23]
Bob Jordan
What we'll share today is the most transformational plan we have ever had.
- [36:27]
Narrator / David Brown
Jordan ticks off the transformation plan's details. It's called Southwest. Even better. Under the plan, Southwest aims to cut $500 million in annual costs and generate $4 billion in new annual revenue in the next three years. One way it hopes to make that extra money is by assigning seats and selling premium seats for the first time in its 52 year history. Southwest announced that change months earlier and today a 737 in a nearby hangar has been outfitted with the new cabin layout, including extra legroom seats. During Jordan's presentation, Southwest ushers a handful of social media influencers into the hangar. Some seem excited, really excited about the redesigned interiors with those premium seats. One posts this from the event we are on our way to go see the brand new inside of the Southwest plains. Oh my gosh, look at it. Other attendees have a more muted reaction to the changes, Jordan announces. He explains that Southwest will soon fly its first ever scheduled red eye flights and it'll partner with international airlines so that passengers can use Southwest to book domestic journeys that connect two overseas flights. What it's not is a first for the airline industry. Legacy carriers like Delta have been selling premium seats and offering red eyes and partnering with international airlines for years. So too have budget airlines like JetBlue. Still, Jordan says the changes will net Southwest $4 billion in additional revenue by 2027, money that could shore up Southwest's shrinking profit margins. What Southwest isn't changing is its point to Point flying network that is built on one way flights and not on connections through so called hub airports. It's also not giving up its reliance on the Boeing 737. And as Jordan explains, Southwest is also not going to start charging for bags. That raises eyebrows among the attendees. Many know that Elliot has also cast doubt on bags flying free because these days bag fees are big business. They generate a total of $7 billion a year for US airlines. Jordan says Southwest doesn't want a piece of that piece. The airline studied the issue and found that ending bags fly free would result in an exodus of customers big enough to cause it to lose $300 million in business. Jordan insists that the policy differentiates Southwest in the market and brings customers on board.
- [39:17]
Bob Jordan
And again, on the bagsfly free side, it's a significant driver of why customers come to the Southwest. It's fair, it's schedule, and then it's the policy.
- [39:28]
Narrator / David Brown
Jordan is adamant that he's not changing his mind on free bags. But a few new passengers in Southwest's boardroom may be about to steer him elsewhere. It's October 2024 in New York. In Elliott's Manhattan offices, the activist investment fund's representatives are hammering out a peace accord with Southwest executives. Bob Jordan signs off on many of the changes Elliot has asked for. The airline will shrink the size of its board of directors and will replace five board members with people handpicked by Elliott. Southwest will also send longtime chairman and former CEO Gary Kelly into early retirement and appoint a new chair chair. Jordan now has new bosses on the board and they're watching his next moves very carefully. You know, once activist investors show up, that's a game changer. Attention founders and CEOs. If you are public, you're never really in the captain's seat alone. Elliot management didn't just buy shares, they bought leverage. And when they get on board, they expect change, not peanuts. The warning here, if you don't fly your company toward maximum profits, someone else is going to take the yoke. As the new year dawns, Southwest starts to roll out its remake. It begins by dispatching executives to Washington, D.C. to announce the airline's first ever international flying partner. At the Embassy of Iceland, Southwest holds a press event with Icelandair to announce the partnership. It'll allow Southwest passengers to book a domestic ticket with Southwest that connects them to Reykjavik and then potentially onto other destinations in Europe served by Icelandair. A month later, on February 13, 2025, Southwest puts its first ever red eye flight into service. Southwest has had the technology to sell Red eye flights since 2017. But this will be the first test of that tech. It works without a hitch. Passengers board Flight 5998 at Los Angeles International just after 9pm they're headed for Baltimore Washington International, where they'll arrive in the wee small hours of Valentine's Day. That's on purpose. Southwest is, after all, the Love airlines. It reminds passengers of that as they take a photo on board before departure. All right, folks, ready? Say love. Four hours and 15 minutes later, the plane touches down. It's one long flight for the passengers, but just one small step toward change at Southwest. But an even bigger change is just days away. And when that happens, no one will be feeling the love. It's February 17, 2025, in Dallas. @ Southwest's Love Field headquarters, a mass email has gone out to all staff. It's 4pm and they're notified that the building will close at 6. Everyone needs to be out by then, and the office will not reopen tomorrow. The email says that in the morning, workers will be scheduled for virtual meetings in which they'll find out if they've been fired or not. The message is greeted with astonishment. Although other airlines have cut thousands of jobs over the decades since Southwest first took flight, Southwest has never had a mass involuntary layoff until now. The next day, thousands of workers get another notification. 1750 of them are being let go. And a key executive who led Southwest's transformation and championed its decision to keep bags flying free. He's also resigned. The layoffs represent 15% of the corporate workforce. It's promised to save the company more than $500 million by 2027. In a written statement, Bob Jordan calls the move a monumental shift. Some call it more than that. One airline blogger calls it a shot to the Love Airlines heart. In the comments on that blog post, a Southwest employee calling himself Captain Layoff says it's a move from which Southwest will never recover. And there's one more big move to come. It's March 2025 in Dallas at Love Field. Southwest Airlines officials hit send on a stunning announcement. They're ending bags fly free for all passengers. Certain flyers, like Southwest credit card holders will still get the perk. But it's no longer for everyone anymore. And there it is. The sacred cow just got turned into steak. Killing a beloved policy can unlock new revenue, sure, but it also risks alienating your base. The same perk that once brought customers through the door is now gone. And the same might be said for hardcore customers. Brand loyalty. That's something built over decades and lost in a press release. Founders beware Just because a spreadsheet says profit doesn't mean longtime customers will keep saying yes. Southwest's New Board Bob Jordan's new bosses have leaned on Jordan for weeks about his earlier decision to keep the free bag policy. They've suggested that the analysis Southwest did a year earlier saying an end to free bags would cost the airline money. That was flawed, they say. Now Jordan has capitulated and the travel industry is freaking out. United's CEO says Southwest has just slayed the sacred cow. Travel writers and at least one TikToker say the end of free bags will send Southwest Airlines straight to the scrapyard. I can't wait for Southwest's new bag policy to become a case study for business students on how to quickly destroy your brand. We'll have to wait for a while to see if Bob Jordan's Southwest becomes a case study in what not to do, or if Jordan may be doing exactly what it takes to save this airline. Southwest was once a tiny Texas only carrier that created into a national powerhouse fueled by its low fares and friendly service. But it's long lacked the kind of revenue generating offerings like bag fees and premium seats that other airlines have made billions from. Now that's changed and so has Southwest. One thing is certain, Southwest has changed enough to be finally out of the middle seat that it's been stuck in for a while. But has it changed for the better or the worse? The answer to that, at least for now, is very much up in the air from wondering. This is episode two of Can Southwest Airlines Survive for Business Wars? A quick note about the recreations you've been hearing. In most cases, we can't know exactly what was said at the time. Those scenes are dramatizations, but they're based on historical research. I'm your host, David Brown. Joseph Guinto wrote this story. Sound designed by Josh Morales. Fact checking by Gabrielle Drollet. Our managing producer is Desi Blaylock. Our senior managing producer is Callum Plews. Produced by Tristan Donovan of Yellowant and Kate Young. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer. American. Our executive producers are Jenny Lauer Beckman and Marshall Louie. For wondering.
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Nick Cannon
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