Tens of thousands of airline industry workers are bracing for layoffs and furloughs on Thursday if Congress fails to pass a relief package aimed at alleviating the economic impact of the coronavirus pandemic. (Sept. 30)
With no new federal stimulus in sight, Southwest Airline’s chief announced management pay cuts and said he will seek to negotiate concessions from workers to avoid layoffs.
In saying he believes the airline can navigate the crisis without furloughs, CEO Gary Kelly sought Monday to stand apart from rivals. American and United Airlines, for instance, have warned that 32,000 employees would collectively face layoffs after Congress was unable to come to agreement on a new relief package.
Airlines are scrambling to cut costs after the federal stimulus ran out last week. Congress delivered $50 billion in relief to airlines last spring to offset a severe drop in passenger traffic due to the coronavirus, half of it to pay salaries. Kelly said Southwest’s revenue remains 70% below what it normally would be.
The House of Representatives passed a new $2.2 trillion relief measure favored by Democrats last week, but the GOP-led Senate wasn’t expected to take it up. House Speaker Nancy Pelosi, D-Calif., has been in talks with Treasury Secretary Steven Mnuchin and it is still uncertain whether a separate bill to aid the airlines, a strategy favored by the White House, can be hammered out.
Kelly said Southwest needs to plan for cost reductions in case no further federal help comes through. He invoked the airline’s maverick history and noted that labor is the highest area of cost.
“We have a clear way to do all of this without layoffs or furloughs, at least through the end of next year,” he said in a video message to the workforce. “As usual, we’re different from the other airlines.”
He said he will work without his base salary through the end of next year. Managers and the board of directors will also take pay cuts.
But when it comes to dealing with the unions, such as those representing pilots and flight attendants, Kelly said he needs to have cost cuts in place by Jan. 1.
“We simply do not have time for long, complex, drawn-out negotiations. We need to move quickly and have cost savings in place,” he said. Furloughs would only be a “last resort” if agreement can’t be reached.
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