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Southwest Airlines warns staff of first layoffs in carrier's history

Nov. 06, 2020
3 min read
Southwest Airlines warns staff of first layoffs in carrier's history
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The coronavirus pandemic may force Southwest Airlines to do something it has never done before: furlough staff involuntarily.

After granting staff a six-month reprieve in July, the Dallas-based carrier sent notices of possible furloughs to 42 material specialists in its technical operations team on Friday. It was the first time Southwest has sent such notices in its nearly 50-year history.

The notices were sent after what the airline said were failed cost-savings talks with the International Brotherhood of Teamsters union.

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“This is not the result we hoped to achieve," Russell McCrady, vice president of labor relations at Southwest, said in a statement. "We are not closing the door to further discussions... we hope to continue seeing progress that will protect our employees."

Discussions with the Teamsters, and other unions, began in October after Southwest CEO Gary Kelly called for shared sacrifice among employees to get through the crisis.

If the furloughs occur, Southwest will join a long list of U.S. airlines forced to involuntarily reduce staff because of COVID. Alaska Airlines, American Airlines, Hawaiian Airlines, Spirit Airlines and United Airlines let go of well over 30,000 employees combined since Oct. 1. Employment protections under the federal coronavirus aid package, or CARES Act, expired the day before.

Related: Southwest Airlines seeks historic cuts from unions as it tries to avoid layoffs

Delta Air Lines may furlough up to 1,900 pilots if cockpit crewmembers do not approve a recently reached agreement-in-principal that would achieve needed cost savings for the airline.

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A six-month extension of the CARES Act payroll support program sought by the industry could see airlines recall staff and stop any additional furloughs. However, the fate of any further relief for U.S. carriers now appears to hinge on the outcome of the election.

As far as furloughs go, 42 staff members is small for an airline the size of Southwest. The carrier had 57,931 active full-time employees at the end of September, about 4% fewer than a year earlier.

Related: More than 30,000 furloughs begin as ‘terrible Thursday’ arrives for airlines

More than 4,200 Southwest staff took voluntary departure packages over the summer. Coupled with an extended leave program designed to avoid furloughs, the airline was able to reduce staffing by roughly a quarter.

With the warnings sent to staff, it does not appear the voluntary packages were enough. Southwest continues to hemorrhage money -- it expects to lose about $11 million a day in the fourth quarter — and executives have said that both additional cost cuts and more revenue is needed to breakeven.

"The worst may be behind us," Kelly said about the crisis in October. "And yes, we have a long way to go."

Related: Meet Southwest Airlines' nine hubs

Featured image by Boston Globe via Getty Images

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Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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    Earn 10,000 bonus points after spending $1,000 on eligible purchases in the first 90 days and redeem for a $100 statement credit, gift cards, or travel

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The revamped Wander Card from Credit One Bank earns cardmembers up to 10 points per dollar spent on eligible travel purchases. With no foreign transaction fees, the card is also great for international travel. However, points earned from this card can only be used at a fixed value, so it may not be the best option for those striving to get maximum value from their rewards.

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  • Earn 10x points on eligible hotels and car rentals booked through the Credit One Bank travel site
  • Earn 5x points on eligible travel, dining, and gas
  • Earn 1x points on all other purchases
  • Redeem your reward points for statement credits, gift cards, merchandise, flights, hotels, and more
  • With $0 Fraud Liability, you won’t be responsible for unauthorized charges
  • Free Online Credit Score and Credit Report summary, terms apply
  • If you are a Covered Borrower under the Military Lending Act, you may get a different offer
  • See Rates & Fees