- Southwest Airlines CEO Gary Kelly in a letter to employees Sunday said the airline “will not furlough or layoff any Southwest Employees on October 1, unlike” its competitors, CNN reported.
- The airline industry has suffered during the COVID-19 pandemic with a significant decrease in air travel. and other airlines, like United Airlines and American Airlines, have announced plans to layoff large percentages of their workforce.
- Airlines that received funding through the CARES Act are unable to layoff employees through the month of September.
- “Further, we have no intention of seeking furloughs, layoffs, pay rate cuts, or benefits cuts through at least the end of this year,” Kelly wrote.
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Southwest Airlines CEO Gary Kelly told employees in a letter Sunday that the company would not lay off or furlough employees in October as competing airlines have announced, CNN first reported.
“Further, we have no intention of seeking furloughs, layoffs, pay rate cuts, or benefits cuts through at least the end of this year,” Kelly wrote. “We have never had any of these in our 49-year history.”
Nearly 17,000 of Southwest employees have taken voluntary separation packages and extended time off from the company, he wrote.
“I can’t guarantee it will never happen, especially during these dark pandemic times,” Kelly added of future layoffs. “I can promise you it will be the last thing we do to keep Southwest financially healthy and viable.”
Kelly told employees that Southwest has lost approximately $1.6 billion year-to-date and was losing an additional $20 million every day. To compensate, he wrote the company had cut projects, worked with the US government to secure $3.2 billion in funds via the CARES Act, sold $2.2 billion in company stock to investors, and borrowed more than $12 million from lenders “via aircraft sales and leasebacks.”
—Pete Muntean (@petemuntean) July 26, 2020
“Our Company is in intensive care,” Kelly said.
Southwest currently has 100 planes parked in storage, he wrote, adding that second quarter trips are down 56% from this time in 2019.
The announcement comes amid a turbulent time for the airline industry at large, which has seen a significant decrease in passengers due to the coronavirus pandemic, the effects of which could be felt for years to come, analysts have warned.
Funding received by airlines as part of the March CARES Act stipulated that companies who received funding couldn’t lay off their employees until the end of September, as CNN reported.
On July 15, American Airlines announced it would warn 25,000 frontline employees — about 20% of the company’s workforce — of possible furloughs and layoffs because it predicted air travel will not recover when the CARES Act relief for airlines expires on October 1. Flight attendants are the largest affected profession, with 37% of workers receiving notices, Business Insider’s David Slotnick reported.
Earlier in July, United Airlines issued layoff and furlough notices to 36,000 of its employees, including 15,000 flight attendants and 2,250 pilots, adding it expected air travel to resume to 40% of the typical number by August and that it didn’t expect it to increase through the rest of the year.
Kelly said Southwest currently has $14 billion “in the bank,” which is enough to cover the company’s losses for more than two years, he said.