MIAMI – In a letter sent to employees, Southwest Airlines (WN) CEO, Gary Kelly says that the airline will not furlough employees on October 1 nor will it cut pays or benefits.
In the history of WN, this has never happened, not even after 9/11 or other economic crisis.
This follows the US CARES Act’s requirement that airlines should not make any furloughs until September 30. Other airlines like American and Delta have already warned employees about lay-offs following October 1st.
WN has reportedly received US$3.2bn of this fund.
Statement from Southwest CEO
“We have no intention of seeking furloughs, layoffs, pay rate cuts, or benefits cuts through at least the end of this year. We have never had any of these in our 49-year history.”
“I can’t guarantee it will never happen, especially during these dark pandemic times. I can promise you it will be the last thing we do to keep Southwest financially healthy and viable.”
The Impact on Southwest
Southwest reported a US$1,5bn loss in Q2 2020 and an additional US$100m before Q2. To acquire cash, the airline sold its aircraft in a leaseback solution. The airline now loses US$20m a day according to the CEO, but the load factors are getting better.
Southwest made several measures to fight the virus: it blocks the middle seat on all flights until October 31. Face coverings are now mandatory and every aircraft is disinfected on a daily basis. Remote working is still in force where it is possible and they also canceled many events according to the letter.
At the start of the week, Airways reported that a quarter of WN employees (17.000) agreed to take voluntary leave, which the airline is grateful for. According to him, it cost them $1,7 billion, but he is happy that they introduced it. Now WN’s traffic is down 70% and it would take triple to be profitable.