Southwest Airlines has promised no furloughs through the end of the year, whether there’s additional government subsidies or not. However 2021 still looks like there will be fewer passengers, and the need for fewer employees to work fewer flights. They have a plan to avoid furloughs. It involves less pay for non-union workers. But to hit their goal they’ll need union concessions, too.
- Southwest Airlines has promised no furloughs in 2020. That’s true even without more government subsidies, which only protect jobs through March 2021 anyway.
- However air travel demand is down. Airlines need fewer people to work fewer flights because there are fewer passengers. Delta Air Lines has been able to completely avoid furloughs of most work groups because they’re a mostly non-union airline. Flight attendants get moved to other roles, they outsource less and shift jobs around. (Delta continues to work with unionized pilots to avoid furloughs.)
Things are harder for Southwest Airlines, which has never laid off employees. They’re unionized, like American Airlines (19,000 employees let go involuntarily) and United Airlines (13,000).
Southwest’s voluntary early retirement offers were more generous than competitors United’s and Delta’s. They were able to offer a strong financial package for employees to leave voluntarily. But it’s not enough.
CEO Gary Kelly delivered a message to employees on what they need to do starting January 1.
- He’s taking no salary through the end of 2021, and board compensation reductions stay in place until then. Leadership employees will take a 10% salary reduction for 2021.
- Non-union employees will take a 10% salary reduction for 2021 but there will be no non-union layoffs.
- They need concessions from labor work groups, to go into effect January 1, in order to avoid union furloughs.
Kelly says they can avoid any job losses, even without additional government support, if they can come to a quick agreement with unions. However if the government gives them additional subsidies, “we will discontinue these pay-cut efforts.” It sounds like even though Southwest would only be required to forestall furloughs three additional months if they receive an additional $3.3 billion from the government (assuming a $25 billion ‘clean extension’ of CARES Act support) that they won’t seek 2021 concessions for April.
Negotiating concessions is hard, even short-term concessions, especially when you’re talking about having a minority of union member jobs at risk. Senior members, who represent the majority of members who would be keeping their jobs, aren’t likely to want to give up pay to help other members of their union keep theirs.
It’s those senior union members Kelly addresses directly,
If you’re senior, you might assume this just affects the junior people. That is incorrect. It affects everything: schedules, days, nights, locations, moves, training. It is very disruptive. Our focus is on driving traffic and winning back or winning new Customers. We are adding new cities in that vein—we’re playing offense. And, that’s very exciting. If we furlough, we will have to cut deep to realize adequate savings. And, cutting our capacity deeply works against our goal of driving more traffic. We need the cost savings and the People—it’s as simple as that.
Six months ago Southwest’s largest union went public with their position of ‘full pay to the last day’ no concessions under any circumstances. They were willing to sacrifice their junior members to protect the pay of their highest paid senior members. We’ll see if they continue to stake out this ground.