Southwest Airlines seeks historic cuts from unions as it tries to avoid layoffs
Southwest Airlines will approach its labor unions for concessions for the first time in its nearly five-decade history as air travel remains at 1970s levels due to the coronavirus pandemic.
In a video message to staff on Monday, CEO Gary Kelly said the "time has arrived" for Southwest to begin discussions with its labor unions regarding concessions. The cuts are needed to forestall what are expected to be "billions" of dollars in quarterly losses until a COVID-19 vaccine is widely available.
"Absent substantial improvements in our business, our quarterly losses could be in the billions until vaccines are available, distributed, and effectively kill the pandemic — and at best that’s looking like late next year," said Kelly. Southwest has notably not posted an annual loss since 1972.
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In addition to any labor concessions, Kelly will forgo his salary through the end of 2021 and all senior executives will take a 20% pay cut.
The cost-cutting moves follow the failure of Congress to extend payroll assistance by the Oct. 1 deadline. Since the expiration of protections under the federal coronavirus aid package, or CARES Act, at least 40,000 airline workers have been furloughed to laid off.
The Senate has adjourned through Oct. 19, seeming to put any possible action at least two weeks off — and two weeks before the presidential election.
Southwest already has committed to not furloughing staff before Jan. 1, 2021 — a promise Kelly reiterated on Monday. Barring either retroactive action by Congress, labor concessions or a sudden recovery in air travel, furloughs may be necessary, he said.
TPG Q&A: Southwest CEO Gary Kelly chats about his legacy, new cities and change fees
"We’re going to have bad times, and going to have to sacrifice in the really bad times," said Kelly. "I’ll just remind you: this is the first time in our history this has happened. That’s a pretty darned good track record, and reason to believe, this too shall pass."
Kelly promised to roll back any concessions if Congress reaches a deal.
Southwest has historically grown out of crises. After 9/11, it resumed its full schedule and even added Norfolk (ORF) to its map less than a month later. The recession of the early 1990s allowed it to grow in California — where it is now defending its grip with new Long Beach (LGB) and Palm Springs (PSP) flights — and push American Airlines and USAir out.
Related: Southwest Airlines could cut cities without additional coronavirus aid
But the coronavirus has proven to be by far the worst crisis airlines have ever seen — even seemingly indomitable Southwest. The airline has cut flying from its schedule since the summer peak and just slashed its November schedule by about 30 points to down 38% compared to 2019, according to Cirium schedule data.
The airlines plans to add three cities — Miami (MIA), Palm Springs and Steamboat Springs, Colorado (HDN) — this winter, more an effort to diversify its revenue streams than actual expansion.
“[The] outlook has actually gotten darker — something I would not have believed possible just a few months ago," Alexandre de Juniac, director general of the trade group the International Air Transport Association (IATA), said about the outlook for air travel on Sept. 29. The organization does not expect a full recovery until at least 2024.
Related: Airlines are flying some unexpected routes during the pandemic. Will they stick around?
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- 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.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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Rewards Rate
| 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. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
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You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
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Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
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 $6,000 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.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.