No furloughs for Southwest in 2020, thanks to nearly 17K voluntary departures
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."
Sign up for the free daily TPG newsletter for more airline news!
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.
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
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 5X | New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App. |
| 3X | Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines. |
| 2X | Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Pros
- Valuable dining and food-related credits
- Flexible rewards with airline and hotel transfer partners
- Multiple travel and purchase protections
- No foreign transaction fees
- Access to Amex Offers for additional savings (enrollment required)
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.