MIAMI – Southwest Airlines (WN) CEO, Gary Kelly announced today that 28% of WN workers agreed to take temporary or permanent leaves according to different modalities.
Following a plan to save its cashflow, WN had already announced that it would offer said leaves for its staff.
However, last week, Kelly stated that furloughs and layoffs were still on the way if passenger demand did not have a significant jump.
Today, the CEO felt “incredibly grateful” for those employees who shook hands on different agreements. He was also grateful for not parting ways with them via involuntary leaves.
The agreements mean that 4,400 employees will leave the company and 12,500 will continue there under the extension of an “emergency time off.”
Trying to Avoid Any Extra Debt
Regarding its payroll prolongation, the carrier will soon decide on the number of granted leaves based on its operational needs, according to Bloomberg.
Having filed for a CARES Act government loan, WN will have access to US$2bn in funds. however, Kelly says that the airline is doing all it can to preserve cash, so it can avoid relying on the loan prior to September 30.
Airline Actions Rely on Passengers Demand
According to Bloomberg, the company has received about US$3.2bn from U.S. taxpayers to help cover payroll costs, which is one of the grasp of CARES Act.
By now, the airline has set a social distancing policy by limiting seat selection during purchase. In addition, it expects to keep the policy that way throughout September in light of health and safety concerns.
While today’s announcement is a blow of fresh air for WN, passenger revenue is a variable that could change carrier’s plans on saving cash, seat selection, and access to government loans beyond the payroll situation.