Southwest Seeking Wage Concessions to Avoid Furloughs

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With the closing of CARES Act subsidies on Oct. 1 and the announcement today from the White House that further negotiations for COVID-driven economic relief will be held until after the November election, airlines are among the industries scrambling for survival. Among them is Southwest, which has never had to furlough staff but is now seeking a 10 percent pay cut to help it remain afloat. Southwest CEO Gary Kelly says that non-union employees will see this pay cut in 2021 while the airline is seeking union approval for additional cost-saving measures next year. This comes after an aggressive effort to induce early retirement and voluntary separations this year. Domestic flying is expected to recover slowly over the next year, though it is expected to fare better than international traffic, which is looking unlikely to recover substantially in 2021.

In an effort to control costs, Kelly has reduced his salary to zero after an earlier pay cut, while other members of the management team will take an immediate 10 percent pay cut. Kelly says that these concessions may not be necessary if Congress provides another round of economic support, but that seems to be a long shot as the November election looms and other issues have dominated the news cycle. American and United have announced a total of 32,000 furloughs after the CARES Act support ended a week ago, and other less financially stable airlines expected to make cuts in staff and flights, and accelerate retirement of older, less efficient aircraft. 

“We had hoped the federal government would again move swiftly” to provide a second round of support, Kelly said in a video message. “But they have not. And that is disappointing. We’ve lobbied hard and have tremendous support for extending the PSP [payroll support program]. So it’s frustrating that we have yet to see legislative action. In the meantime, our country needs us to keep flying, which means we keep burning cash every day.”

You can watch the full video here.

KITPLANES Editor in Chief Marc Cook has been in aviation journalism for more than 30 years. He is a 4000-hour instrument-rated, multi-engine pilot with experience in nearly 150 types. He’s completed two kit aircraft, an Aero Designs Pulsar XP and a Glasair Sportsman 2+2, and currently flies a 2002 GlaStar.

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9 COMMENTS

  1. If I could single out one airline to receive a taxpayer subsidy during this mess, it would certainly be SWA. They have always treated the customer fairly and with respect. Their fares are excellent, service with a smile, and during this virus mess they still have the middle seat blocked through at least November. Thank you SWA. Wish I could help you.
    For the most of the rest of you, although I love airplanes and pilots, you other companies can stick it as far as the taxpayers continuing to provide subsidy for nothing now except wages for no work. You figure it out. When you were fat, you screwed the customer over in every way you could conceive and get away with. No, I won’t go into listing the additional fee after fee after fee you have tacked on each fight, including even a seat to use. For me, you want my taxes now to continue doing more of the same, not from me if I have any say.

    • You should have a couple of conversations with SWA employees though regarding what they are subjected to in order to provide you all of that service with a smile before you shower that company with any additional accolades. From the accounts that I have read it is far from the happiest place on earth to work.

        • I’m sure you’re right, and that suffering isn’t universal within the company, and certainly anyone working in aviation these days is simply happy to have a job – any job. But the accounts I have read is that especially for the customer facing positions, a complaint directed towards an employee, for even the smallest misunderstanding or transgression is at best considered a permanent black mark, and at worst grounds for early termination.

    • “No, I won’t go into listing the additional fee after fee after fee you have tacked on each fight, including even a seat to use.”

      I don’t like it any more than you do. But the fact is that airlines set prices the way they do because we, the public, demand it.

      The trouble began in the late 1990s when the internet allowed people to buy tickets on-line. That took travel agents out of the loop. With no human intervention to explain why one flight was better than another, the public did what they always do – compare prices, and go for the lowest.

      The race-to-the-bottom really accelerated when Travelocity and similar web-sites appeared. Now the public could plug in a departure, destination, and date, and have a list of flights from every airline sorted by price. Want to be at the top of that list? Drop your prices. There’s no room in that brutal comparison list for explaining comfort, service, or amenities. Price alone dictated who was “number 1” on that list. If the public was not shopping for amenities, why offer them? They only cost money, and prices had to be cut to be at the top of that list.

      And now here we are, boarding sky-bound Greyhounds with as much desire and decorum as their ground-bound equivalents. Progress is not always improvement.

      • This post is quite correct. Now that the airlines (cheap fares) business model is no longer working doesn’t mean the taxpayer has to foot the bill for airline companies and executive screwups! If the government wants to give direct aid to the employees who loss their jobs, fine. But let those airline execs figure out their way out of the mess they find themselves in. If that means someone goes belly up so be it.

        • Their business model worked well, but let’s face it: A stock market crash coinciding with a pandemic is hardly a predictable scenario for companies to ponder. The Unions will be there in all their glory to minimize the impact on their members. Southwest crews are among the best in the industry, so they’ll find work even if furloughs occur.

  2. No company broaches such topics with their employees unless they’ve got an ace in the hole. Airline Unions are among the most potent collective bargaining entities in the U.S. The ALPA in particular will flight to their last codicil to prevent furloughs, wage concessions or reductions in benefits for their members. I’ve always admired Southwest for their scrappy business model, which commenced with the “No Frills” concept of the 1970s. They’ve amassed an amazing safety record, and their domestic market share is second to none. Maybe Southwest should consider how their people have worked so diligently to make their company number one in America before they cut their compensation.

  3. So much for the supply and demand principle of the capitalistic economic model. When the demand decreases it was dependant upon the supply to be reduced as well. Having spent nearly five years on furlough during the business retraction in the early 80’s, I’m very familiar with that concept.
    Having bankrolled the most expensive payroll at the airlines with pilots making the highest pay in my memory… having them sit out another six months on the taxpayers dime is unacceptable. I would support ALPA’s position of renegotiations where the cost of staying on payroll is borne by the pilot group and decreasing their overall costs and sharing that burden. The taxpayer shouldn’t be responsible for throwing more money down a black hole while the affected participants can continue drawing salaries in a month that amount to what many Americans make in 6-12 months. This business won’t be the same for as long as we are in a global pandemic and most countries are closed to us. Not to mention that folks are now hanging on by a financial string and wondering about the next rent or mortgage payment.