Southwest warns of 6,800 furloughs

Southwest Airlines has warned it may have to furlough as many as 6,800 staff.

Leslie Josephs from CNBC reported:

Southwest Airlines on Thursday said it could furlough more than 6,800 employees — about 12% of its staff — citing what it called a “lack of meaningful progress” in cost-cutting negotiations with labor unions.

Southwest like other airlines has been struggling because of the coronavirus pandemic’s devastating impact on air travel demand. American Airlines and United Airlines in October started furloughing more than 30,000 workers combined after the terms of federal payroll support expired.

CNN’s Pete Muntean, Gregory Wallace and Chris Isidore wrote:

US airlines, including Southwest, (LUV) received a total of $25 billion in federal help earlier this year with the condition that they not institute any involuntary job cuts through the end of September. United (UAL) and American Airlines (AAL) furloughed 32,000 employees between them on October 1, the day that prohibition ended.

Delta Air Lines (DAL) has avoided involuntary job cuts because employees took voluntary buyouts and early retirement offers, and its pilots agreed to changes in their contract that would reduce labor costs. But some 16,000 other job cuts have been instituted or planned across the rest of the airline industry before Thursday’s announcement from Southwest.

Kyle Arnold from The Dallas Morning News reported:

Southwest’s management has been pushing union workers to agree to 10% pay cuts for 2021 to help the company save money as it continues to lose cash, with business down more than 60% during the COVID-19 crisis. Furloughs wouldn’t be needed if workers agreed to the wage cuts, the company said.

Nonunion and management workers have already taken similar pay cuts, and CEO Gary Kelly has cut his $750,000 annual salary to zero for next year, even though much of his annual compensation is made up of stock grants and bonuses that are likely to be much lower for 2020.