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No furloughs for Southwest in 2020, thanks to nearly 17K voluntary departures

July 26, 2020
4 min read
No furloughs for Southwest in 2020, thanks to nearly 17K voluntary departures
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Southwest Airlines got a leg up in its efforts to avoid the first-ever involuntary furloughs in its nearly 50-year history. Nearly 17,000 staff say they're willing to leaving the carrier in order to help it weather the coronavirus pandemic.

The Dallas-based carrier had nearly 28% of its staff, or 16,895 of its roughly 60,800 employees, agree to take either voluntary exit or extended unpaid time off packages, Southwest CEO Gary Kelly told staff in a message on July 20 shared with TPG. The departures are part of a larger effort by the airline to prune its workforce in response to the crisis.

"I’m very pleased with the response," Kelly said. "It is a bittersweet moment for us for sure."

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Then, on Thursday, July 24, Kelly shared another memo with some exciting news for the company's employees. In it, he stated that involuntary furloughs won't be needed through the end of 2020. "We have no intention of seeking furloughs, layoffs, pay rate cuts or benefits cuts through at least the end of this year," he wrote.

It's not all optimism though. Kelly did caution that Southwest "can't guarantee it will never happen, especially during these dark pandemic times."

But thanks to the nearly 17,000 employees who've signed up for voluntary exits or extended time-off, the airline will be able to maintain its 50-year track record of avoiding mass furloughs.

The employee departures from Southwest, whether permanent or for an extended period, come as many of its peers are also warning staff of possible furloughs. Delta Air Lines sent notices to more than 2,500 pilots — although it finds itself short of flight attendants in July — American Airlines to 25,000 staff and United Airlines to 36,000 employees to date.

U.S. airlines must notify employees of possible furloughs or layoffs at least 60 days before they occur under federal law. Most carriers are expected to make large workforce changes around Oct. 1, or the day after employment protections under the federal coronavirus aid package, or CARES Act, expire.

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Southwest, like other airlines, has seen the return of flyers stall amid rising COVID infections in the U.S. However, the airline has managed this in past economic crises, including after 9/11 and the Great Recession, although the coronavirus crisis is widely acknowledged as being far worse.

Related: Air travel recovery may come slower than expected, with Southwest a likely leader

Although the carrier hoped to fly a "full" December schedule, those plans have changed. During the airline's second quarter earnings call on July 23, Kelly said that Southwest plans to fly about 25% less than it flew at the end of 2019 by December. The flight reductions are still in the works and will be loaded in its schedule over the coming weeks.

“And, if demand is like it is today, that won’t be enough,” Kelly added in a dour note on the outlook. “We’ll have to be smaller.”

The recovery in air travel has unequivocally stalled. Every carrier from Delta Air Lines to United Airlines — and now Southwest — have acknowledged that when the resurgence of COVID-19 was leading the news cycle around the July 4 holiday, Americans stopped buying tickets to travel.

Related: Southwest Airlines is cutting more than 100 routes from its ‘full’ schedule this winter

"The recent rise in COVID cases and increasing regional restrictions on businesses and states requiring quarantine aren’t positive developments for our business," Kelly told staff on July 13.

J.P. Morgan analyst Jamie Baker said he is "increasingly convinced" that the recovery will take at least two years — or until 2022 — to return to 2019 passenger numbers, in a report on July 19.

For now, Southwest employees are safe from furloughs. What happens next is anyone's guess — and will likely be tied directly to the recovery in air travel demand.

Related: Airlines may face a tough fall after that summer uptick

Additional reporting by Zach Griff

Featured image by ullstein bild via Getty Images

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  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
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Best premium travel card for value
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
5xEarn 5x total points on flights through Chase Ultimate Rewards®.
3xEarn 3x points on other travel and dining.
1xEarn 1 point per $1 spent on all other purchases
  • Intro Offer
    Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

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  • Annual Fee

    $550
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more