Nike employment drops 5%, CEO John Donahoe takes an 11% pay cut
Nike employs 5% fewer people than it did a year ago, according to an annual report filed Thursday with the U.S. Securities and Exchange Commission.
In February, Nike CEO John Donahoe said the company would cut 2% of its global workforce, or about 1,600 jobs. The annual report shows Nike, as of May 31, 2024, had 79,400 workers, 4,300 fewer than a year earlier.
Soon, your seat on a Southwest Airlines flight won't depend on your boarding group.
Southwest revealed major changes to its boarding policy and flight schedule on Thursday, July 25, including phasing out its longstanding open seating policy in favor of assigned and premium seating.
Southwest also plans to introduce redeye flights. One of its first redeye flights will be from Phoenix.
The move comes as Southwest, which operates the second-largest flight capacity at Phoenix Sky Harbor International Airport, is working to improve its profitability and the flying experience. In April, Southwest CEO Bob Jordan told investors in an earnings call that his staff was looking into whether ending open seating would satisfy customers' preferences.
Here's what to know about the end of open seating on Southwest Airlines and what other changes may be coming.
Is Southwest Airlines doing away with open seating?
Yes. Southwest will begin assigned seating on all flights in 2025.
In addition, Southwest will create a premium cabin section with extended-legroom seats. This premium section will encompass about one-third of the available seats.
The changes won't occur right away because the new cabin layouts require approval from the Federal Aviation Administration, according to Southwest's announcement.
Southwest will reveal more details about how assigned and premium seats will work and what the cabin layouts will look like during the airline's Investor Day in late September.
When reached for comment by The Arizona Republic, Southwest did not say what the premium-seat legroom would be and whether standard legroom would change from the 32-inch average seat pitch in the current cabins.
Why is Southwest ending open seating?
It has to do with both customer preference and the airline's profitability.
Southwest said it conducted extensive research on passengers' seating preferences and found that 80% of its customers and 86% of potential customers prefer seat assignments. Customers cited the airline's open seating policy as the No. 1 reason why they chose to fly with a competing airline.
"We have been building purposefully to this change as part of a comprehensive upgrade to the Southwest experience as we focus on customer expectations – and it will unlock new sources of revenue consistent with our laser focus on delivering improved financial performance," Jordan said in the airline's announcement.
Southwest is working to improve its financial position. The airline reported a net loss of $231 million in the first three months of 2024.
The airline brought in $7.4 billion in operating revenues from April to June 2024, but the $367 million it took in in profits was more than 46% less than its profit during the same period in 2023, according to its second-quarter 2024 financial report.
Airline staff also expect its non-fuel operating costs, which include employees' salaries and aircraft maintenance, will increase around 11% to 13% in the next three months.
What is open seating on Southwest Airlines?
On a flight with open seating, passengers don't have assigned seats.
Where they sit largely depends on their place in the boarding queue: Those boarding in Group A get the best choice of seats. After Group B, those who board in Group C usually are limited to middle seats and little to no overhead space for carry-ons.
Southwest's open seating policy was introduced with the airline's founding in 1971. Back then, the seating was first come, first served. The boarding groups began after a 2006 experiment with assigned seating revealed customers' frustrations with the first come, first served approach.
Does Southwest do redeyes?
Besides ending open seating, Southwest announced Thursday that it would begin offering redeye flights that leave at night and arrive the next morning.
Southwest's first redeyes include a nonstop Phoenix-Baltimore flight, which will begin flying on Feb. 13, 2025. The flight leaves Sky Harbor at 11:05 p.m. Arizona time and arrives in Baltimore at 5:10 a.m. Eastern time. We found fares from $236 one way, comparable to or slightly cheaper than other Southwest fares between the two cities.
Southwest will introduce four other redeye routes in February 2025 — Las Vegas-Baltimore, Las Vegas-Orlando, Los Angeles-Baltimore, and Los Angeles-Nashville — with more possible in the future.
Will Southwest change its Bags Fly Free policy?
Some travel industry analysts, such as Steve and Paul Glenn of the Nebraska-based travel management company Executive Travel, speculate that Southwest will eventually change its checked bag policy.
Right now, the airline allows each passenger to check their first two bags for free — a sharp contrast from competitors such as American Airlines, which recently changed its baggage policy to charge $40 for the first checked bag.
The Glenns forecasted in a June podcast that Southwest would reduce that to one free checked bag if its profitability doesn't improve.
When asked by The Republic if Southwest would change its baggage policy, a Southwest spokesperson said, "No additional changes forthcoming at this time."
Last year, Stellantis NV notched record-high profit and revenue results, but this year, not so much.
On Thursday, the maker of Chrysler, Dodge, Jeep and Ram, as well as other brands sold around the world, said its net profit tumbled by almost half in the first six months of the year to $6.1 billion (5.6 billion euro) compared to the same period in 2023, as net revenues sunk 14% to $92.2 billion (85 billion euro).
A leading problem right now for the transatlantic company? It's sputtering the U.S. market. Bloated vehicle inventories and holes in the product lineup have hurt the automaker, whose U.S. sales were down 21% in the second quarter. Concerned dealers have in recent months pointed to high sticker prices, insufficient incentives, older vehicle stock, and marketing issues.
CEO Carlos Tavares said Thursday he's taking a hands-on approach to putting the North American market — a critical profit engine for Stellantis — back on track. Last week, he said he met in person with American dealers, and he plans to return in August, using some of his usual vacation time to meet with his U.S. teams "to find the appropriate answers."
"It's an understatement to say that H1 2024 results were disappointing and humbling," Tavares said on a call with investors.
He said there had been a "perfect convergence of several headwinds" that struck the company just as it invested heavily in a blitz to release more than 20 new vehicles worldwide this year. Stellantis racked up too many expenses in certain areas, such as research and development, has dealt with operational issues, including at some factories, and also struggled to find the right marketing tactics to sell more vehicles, especially in the United States.
Long known for his aggressive cost-cutting, Tavares said more "cost-saving actions" are planned for the second half of 2024. Executives didn't discuss how much they were able to save in the first half through their cost-trimming efforts, but they said the second-half cuts would be $542 million (500 million euros) above the first six months.
The CEO also said Thursday that he wouldn't hesitate to find further savings by chopping underperforming brands in the company's 14-member portfolio, according to Reuters: "If they don't make money," he said, "we'll shut them down."
Stellantis' challenges aren't isolated to the United States. Adjusted operating income was down 45% in Europe compared to a year earlier. Other regions, including South America, the Middle East and Africa, and China, India, and the Asia Pacific, also faced at least a somewhat rocky six months.
But many of the American problems have been especially tough to diagnose and fix, Tavares said. Elevated inventory levels in Europe have come down in recent months to around 65 days of supply. Yet in the profit-rich United States, Tavares said the company has so far "failed" to resolve the problem, and at the end of June, Stellantis brands averaged 94 days.
"Their profits are off 50%; our profits are off drastically," said Ralph Mahalak Jr., who owns Stellantis dealerships in Michigan, Ohio and Florida. "Our market share is down significantly from a year ago. But the thing you've got to keep in mind is we've got a lot fewer models to offer today than we did a year ago. That's certainly a problem for us."
A "product blitz" coming soon will boost sales and help fill some of those gaps in Stellantis' lineup, Tavares said. In the United States, that includes vehicles like the electrified Ram 1500 pickups, electric Jeep SUVs, new gas and electric versions of the Dodge Charger, and others. The company also plans to bring back the Jeep Cherokee next year, filling a gap in a top-selling SUV segment, as well as a small Jeep electric SUV that Tavares pledges will cost $25,000 and arrive in 2026.
"Any time you bring new models and products to the market, you generate buzz and attention, and that can't be bad," Erin Keating, an executive analyst at Cox Automotive, said in an email. "But if pricing stays out of whack and customer demand slows, it may be too little, too late, considering the inventory of outgoing model years that may be building up on the lots."
Tavares told reporters in a briefing there may be some room to cut vehicle prices as long as Stellantis can compensate by making cost reductions on the production side. But he said the larger problem has been a weak North American marketing strategy. The company also must ensure shoppers can easily see what incentives are offered on certain vehicles when they first begin their research so they're not quickly scared away by a relatively high sticker price.
Elevated Stellantis vehicle prices have been a consistent concern for dealers. In the second quarter, Stellantis, on average, sold its U.S. vehicles for $57,569, more than 18% higher than the industry average, according to Cox. Its average transaction prices were slightly higher than during the same period in 2023.
Mahalak said he could use more help moving cars off his lots: "We definitely need more incentives from Carlos Tavares and the executives in Paris." He added that company leaders need to "put their foot back on the accelerator" to help dealers regain their sales volumes from a year or two ago.
Stellantis' U.S. factories also must start running more smoothly, according to Tavares. Too many issues with vehicles are being fixed after they've left the assembly line, he said, with one prominent facility, the Sterling Heights Assembly Plant, which makes the Ram 1500 pickup, especially struggling.
Other problems have included Stellantis plants shutting down due to parts shortages, the CEO said. In some cases, those stoppages have been due to recent monetary disputes between the company and several of its suppliers.
"I see a lot of operational flaws in my company, which to a certain extent gives me hope and confidence on the fact that I can improve the situation, at least on those flaws," Tavares said. "Perhaps other ones will appear, perhaps new headwinds will come up. But on the things I see and the things I touch, I believe we can do a better job. So that's the positive."
He noted that, on the bright side, Stellantis remained "highly profitable" even in what was a disappointing overall first half, and it is executing a new product rollout that would not have been possible for either Fiat Chrysler Automobiles or Groupe PSA before its merger to create the current company in 2021.
Stellantis on Thursday confirmed its 2024 financial guidance, which included a double-digit adjusted operating income and positive industrial free cash flow. The company said those cash flows were near zero in the first half but would improve in the second half.
The company's stock price fell more than 7% on Thursday following the earnings release.
Both General Motors Co. and Ford Motor Co. reported at least somewhat better quarterly results earlier this week. GM beat Wall Street expectations and raised key financial targets, while Ford saw net income slide by 5.3% in the quarter due to warranty problems but said it expected to bounce back in the second half.
Ford's stock dropped 18.4% on Thursday after it released its results Wednesday afternoon. GM stock, meanwhile, was down about 5%.