Southwest Airlines seeks historic cuts from unions as it tries to avoid layoffs
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
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.
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.
“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.
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] 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.
Featured image by John Gress Media Inc/Shutterstock.
Welcome to The Points Guy!
Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in the first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants in the first three months of card membership.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Earn 50,000 Bonus Miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
- Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees