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Southwest Airlines threatens to furlough more than 6,800 workers after impasse over wage cuts

Southwest Airlines issued furlough warnings Thursday to 6,828 pilots, flight attendants, ramp workers and other employees after failing to come to a deal on 10% wage cuts for next year as the carrier looks to slash costs amid the COVID-19 pandemic.

The Dallas-based carrier, which has never furloughed an employee or cut worker salaries in its 50-year history, had already warned 444 mechanics and material specialists and now has issued the same notices to a broader group of union employees, including flight crew members.

Southwest gave Worker Adjustment and Retraining Notices to 1,221 pilots and 1,500 flight attendants, the unions for those two groups said. The company said it also gave notices to 2,551 ramp workers, 1,176 customer service employees in ground operations, 370 customer service workers, six flight attendant instructors and four flight simulator technicians.

The furloughs would come as early as March 15 or April 1, depending on the work group. That would be a critical time for Southwest, with vaccinations coming and the airline expected to prepare to resume service using the recertified Boeing 737 Max jet.

Southwest said the temporary cuts would be needed to “help offset the billion dollars of overstaffing costs projected for next year.”

The WARN notices don’t mean furloughs are certain. The law requires companies to give 60 to 90 days warning before making large planned layoffs or furloughs.

Southwest’s management has been pushing union workers to agree to 10% pay cuts for 2021 to help the company save money as it continues to lose cash, with business down more than 60% during the COVID-19 crisis. Furloughs wouldn’t be needed if workers agreed to the wage cuts, the company said.

Nonunion and management workers have already taken similar pay cuts, and CEO Gary Kelly has cut his $750,000 annual salary to zero for next year, even though much of his annual compensation is made up of stock grants and bonuses that are likely to be much lower for 2020.

“We have been engaged with our unions since early October seeking temporary cost reductions to help offset over one billion dollars of overstaffing costs projected for 2021,” said a statement from Southwest’s vice president of labor relations, Russell McCrady. “Our absolute goal is to preserve every job at Southwest Airlines; however, due to a lack of meaningful progress in negotiations, we had to proceed with issuing notifications to additional employees who are valued members of the Southwest family.”

McCrady said the airline was “willing to continue negotiations quickly to preserve jobs if we can achieve the support that allows Southwest to combat the ongoing economic challenges created by the decline in demand for air travel.”

Jon Weaks, president of the Southwest Airlines Pilots Association, said the furlough warnings are a negotiating strategy. The company wasn’t actually required to hand out WARN notices yet if the cuts wouldn’t come until mid-March or April, he said.

“This is done as a scare and fear tactic to get leverage, and it’s so heartless and insensitive over the holidays,” Weaks said.

The Union brought forth cost-saving solutions to avoid both furloughs, which the Company rejected, instead choosing to send out WARN Act notices. To Members who received notices, know that your Union stands with you and continues to fight for your jobs. Pilots and flight attendants have been pushing Southwest to offer workers more temporary leave and early buyout packages, but Kelly and other managers say they don’t think they could cut costs much with those types of programs. Close 17,000 workers, or about 28% of the airline’s workforce, have already signed up for voluntary leave and early retirement programs. “This is an overstaffing problem,” said Lyn Montgomery, a career flight attendant and president of Transport Workers Union Local 556. “We could all work for free and it wouldn’t solve the problem.”

After getting many employees to voluntarily step away from work earlier this year, Southwest said it wouldn’t need to furlough workers through 2020 even as competitor American Airlines in Fort Worth furloughed 19,000 workers.

The airline industry has lost about 82,000 jobs since March, when the COVID-19 pandemic decimated the air travel industry.

Air passenger traffic is still down more than 60% and even Southwest’s recovery has been slower than executives and analysts anticipated. Airlines including Southwest have noted a slowdown in bookings and an uptick in cancellations coinciding with a surge in COVID-19 cases heading into the winter months.

Montgomery said more than 3,700 flight attendants have indicated they would be willing to take voluntary leave if Southwest offered it again.

Heading into a dire financial situation to start next year, Southwest said it would need its first-ever wage cuts from workers to try to get back on stable financial footing. Wage and benefit cuts require approval from the company’s employee unions.

So far, union negotiators have found little common ground with airline management on cuts. TWU Local 556 has said member surveys show that wage cuts, even temporary ones, are overwhelmingly unpopular.

Southwest and peer airlines continue to push for an extension of the $25 billion in payroll relief grants they received from the federal government in April, which staved off layoffs through September. Despite widespread support in Congress for another round of relief, proposals so far have stalled.

The latest proposal — which includes about $17 billion in airline aid, according to Sen. Mitt Romney, R-Utah — would help subsidize payrolls from December until March.

Kelly has said extending the stimulus program for airlines would eliminate the need for furloughs for now.

This article originally appeared on Dallas Morning News

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