Southwest Airlines, in an effort to prevent layoffs or extended furloughs, is offering “the most generous buyout package in our history” to reduce staffing by about 30 percent, according to reports. Southwest, like many airlines, accepted CARES funding to remain afloat during the COVID-19 epidemic, but that support is due to expire at the end of September and part of that program was a prohibition on airlines releasing workers. Most industry analysts say that commercial air travel may take years to recover to pre-COVID levels and that most airlines are severely overstaffed for the near future.
Southwest’s offer includes both early retirement and extended time-off opportunities for employees. Those choosing early retirement will retain their company-funded health insurance—those under 55 will retain their coverage for a year, while those older will get coverage for five years or until they reach age 65, whichever comes first. In terms of compensation, Southwest will pay pilots roughly two-thirds of their pay (the equivalent of 67 TFP, or Trips for Pay, which is linked to flight hours per month) for five years or until they reach 65. Pilots choosing extended time off, which will be available in from six months to five years, will earn roughly half their normal income (55 TFP per month), and retain both their health care and travel privileges aboard the airline.
“Heading into the fall, we have planned to reduce our capacity by about 30 percent,” Southwest told its employees. “While this number may change, that is our current plan. While overstaffing isn’t tied 100 percent to capacity levels, it would be fair to assume that we are overstaffed in many areas at a similar percentage.”