Updated from 9:27 a.m. EDT
shares rose Friday morning after the carrier offered employees a voluntary retirement program in an attempt to curb overstaffing.
The low-cost carrier, which bucked the trend and didn't lay off any employees in the wake of the World Trade Center attacks, sent out a letter Thursday offering cash payments, health care benefits and travel privileges to employees who volunteer to leave the company. The package excludes the carrier's 30 executives, but applies to all employees who have at least one year of service with the company, which is 33,000 of Southwest's 34,000 employees.
"There couple of reasons behind it," said a spokesperson with Southwest. "Certainly, our employees have seen programs at other companies and had grown interested about participating in one. Especially after we offered a buyout that involved reservation employees back in November when we consolidated three reservation centers. Interest bloomed at that point throughout rest of company."
Indeed, while Southwest has historically shunned layoffs, this is not the first time it has offered voluntary buyouts to employees, but by offering it to all workgroups, it's the largest buyout the company has put on the table. Last year, the carrier offered 1,900 reservation call center employees a buyout package -- and half accepted.
In reaction, shares of the carrier were up 9 cents, or 0.6%, to $15.75.
Southwest has not set a limit on how many employees can accept the buyout, which is open until June 25, and said that no matter how many decide to leave the company, it is not planning any forced layoffs. In fact, Southwest continues to hire employees, especially flight attendants, to fuel its ambitious growth plans.
Earlier this month, Southwest debuted service from Philadelphia, targeting one of
most important hubs. The carrier's service has proven so popular that Southwest is already expanding its service and said it will likely add another new city next year. Over the next 18 months, Southwest will add 58 planes to its fleet, which will require a number of people to staff and service them.
The buyout plan is another example of Southwest's long-standing tradition of giving employees what they want and seeking efficiencies when they come up, not just when business requires them.
Southwest has been profitable for more than 50 consecutive quarters, while many of its rivals struggle to recover from the industry's worst downturn in history. While Southwest faces the same challenge rivals do with regards to rising labor costs, the buyout may help reduce them by adding replacing senior employees with lower-paid newcomers.
"It does help us reduce costs, which all airlines are keen on these days, but again, since its voluntary and going out to so many employees it's difficult to predict what will happen." said the spokesperson. "One of our hallmarks is employee productivity and our people are extremely creative on how to maximize that."