Southwest Airlines will drop wage cut demands and rescind furlough notices after President Donald Trump signed the $900 billion economic stimulus bill that included $15 billion in aid for airlines, the company said in a letter to employees Sunday evening.
The new funding and pandemic relief bill will require airlines to protect jobs and wages through March 31, but CEO Gary Kelly said Dallas-based Southwest Airlines will not likely need to force any employee cuts for the entirety of 2021.
“As I’ve been saying for months, this was always our preferred plan, and it means we can stop the movement toward furloughs and pay cuts that we previously announced,” Kelly said in the letter to workers. “Given this, we currently do not anticipate the need to conduct any furloughs or pay cuts next year.”
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Southwest is in line for about $1.5 billion in grants and $650 million in stock-backed Treasury loans through the new stimulus bill, according to calculations by the Southwest Airlines Pilots Association union.
Company executives told employees in late September that they would need across-the-board 10% wage cuts next year in order to keep the airline on solid financial ground. Southwest cut nonunion pay for 2021 and sought wage cuts from union workers, but talks with unions faltered and the company issued furlough notices for more than 7,000 employees in early December.
Airlines are still anticipating a tough few months ahead until a COVID-19 vaccine reaches wide enough acceptance to reduce the risk of the virus spreading. Kelly has said he doesn’t anticipate a significant recovery in passenger traffic until late 2021 with a full recovery likely taking longer.
Southwest Airlines didn’t furlough or cut wages for any workers in 2020, even during the worst of the COVID-19 pandemic that decimated air travel demand and caused more than $2.2 billion in losses through the first three quarters of the year.
The new airline aid package is similar to the one passed in March as part of the CARES Act. It gives airlines support to cover about 75% of employee payroll from Dec. 1 to March 31 and prohibits air carriers from cutting wages, furloughing and firing workers. It also stops airlines from giving dividends to shareholders and limits executive pay.
Other airlines did furlough workers and will begin recalling pilots, flight attendants and others. Fort Worth-based American Airlines issued paychecks to its 17,500 furloughed workers and has begun recalling those workers.
Chicago-based United said it will recall its 13,000 furloughed workers, but CEO Scott Kirby has said those callbacks will be “temporary” because demand is not likely to recover by the end of March.
Kelly also encouraged Southwest employees to consider voluntary time off.
“Please note that we are still overstaffed in many areas, so if voluntary time-off programs are available in your workgroup, please consider participating whenever they are offered,” Kelly said in his letter. “I know the battle isn’t over, but we’re resilient, and we’re well-prepared to fight so that Southwest emerges stronger than ever, ready to thrive for the next 50 years.”
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