The chief executive of Southwest Airlines told employees on Monday the company would require concessions and pay cuts if it is to avoid involuntary furloughs starting in early 2021. Unlike some airlines, Southwest has promised not to furlough any workers through the end of the year but as the COVID-19 pandemic continues unabated and an extension of federal-state aid remains in limbo, the Dallas-based airline is now preparing to cut costs still further.
Gary Kelly thanked the federal government for a multi-billion-dollar payroll support package that stopped airlines from furloughing employers until the end of September but called for lawmakers to extend the program for at least another six months and at a cost of $32 billion.
“The fact is, it (the payroll support program) just didn’t go far enough or long enough,” Kelly commented in an internal communications video. “The pandemic has devastated travel and tourism. Domestic air travel is at 1970’s levels – down 70 per cent,” he continued. “It’s frustrating we are yet to see legislative action”
But with more federal aid looking uncertain at best and no definitive end-day to the Corona crisis, Southwest is now looking to cut costs still further. “Salaries, wages and benefits are far and away our largest cost item,” Kelly said as he put workers on notice that concessions would now be needed. “We would have to wipe out a large swathe of salaries, wages and benefits to match the low traffic levels to have any hope of breaking even,” Kelly explained.
“We simply cannot afford to continue with the conditions required to maintain full pay and employment.”
Kelly maintains that his goal is to avoid involuntary furloughs but for that to happen, unionized employees like flight attendants will have to accept temporary changes to their contracts. “We will all need to sacrifice more,” Kelly urged.
“That time has arrived,” he said of the need for concessions while warning unions that there wasn’t time for “long, drawn-out, complex negotiations.”
He also had a simple message for more senior workers might refuse to accept concessions because their jobs would still be safe even if involuntary furloughs followed. Echoing calls from the likes of American Airlines, Kelly warned long-serving staffers that their working conditions would change dramatically if involuntary furloughs are made.
But if the federal government does come to rescue, the pay cut proposals will be withdrawn Kelly promised. The hope of an extension to payroll support is, however, fading by the day.
