Southwest Airlines, a Symbol of Freedom

Southwest Airlines announced this morning that it's living up to that old motto, offering nearly every single employee what CEO Gary Kelly calls an "early out" in the wake of a first-quarter net loss, the Dallas-based carrier's third straight decline. Southwest today announced a first-quarter '09 net loss of $91 million, compared to net income of $34 million last year, prompting the buyout offers, a hiring freeze and wage freezes for the airline's officers and senior management, which were also announced in this morning's press release.

Among the reasons for the losses: "a rapid weakening in passenger demand," says Kelly, and a drop in the value of its fuel-hedging program. And he expects it to get worse before it gets better, just as Love Field's about(ish) to undergo a $500-million expansion over which Southwest will have substantial control. Says Kelly:

"We have significantly reduced planned capital spending by approximately $1.4 billion for 2009 and 2010 combined by deferring aircraft deliveries, accelerating aircraft retirements, and suspending plans to grow our capacity. As announced to our Employees earlier this morning, we intend to reduce and align headcount to current capacity needs by offering a systemwide voluntary early-out program. Virtually all Employees are eligible under the early-out program and must make their election to participate by June 19, 2009. We also have a hiring freeze in place and have frozen pay for our officers and senior management. While our balance sheet is strong, we believe these actions, along with our previous decision to suspend growth plans, and our ongoing efforts to bolster our cash reserves, will enable us to weather the current financial storm and remain strong."