Southwest Airlines Announces Pay Cuts, Concessions Bargaining For 2021

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.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Best to furlough > 60% of staff
    Then the majority will be affected and they can vote out their union reps.

  2. The rich get richer and the poor hit the streets. SWA FO’s are not poor, but in the regionals my salary was $39,000. Not good money for the job we do. This is all to protect the pay of the top few.

  3. @Gary

    Let me spoil the surprise, their will be no FA concessions.

    But of course you already knew that.

  4. As 85% of Southwest employees are union members, it might be a good to have the union memberships vote to accept concessions or pay cuts rather than have union leadership decide. Junior members will be unhappy with layoffs and senior members will be unhappy with pay cuts. It is a no win situation.

  5. As the virus gains new steam and looks to do so through the winter, the economy will be harder hit. Everyone will be effected and many will become destitute. This is far more serious day to day and unions might do well to hold together and build strength through taking care of one another. These times involve sacrifice; the old need the young and the young need the example of their seniors. Time for compromise and solidarity against the many forces against the collective rebuilding of our country and future. Unions can be their own best examples of leadership. The American society would be served by seeing unions show not only resolve but generational unity and humanity. Corporate America hasn’t led society well. It would help us all to see union members reach beyond the pecking order that plagues us.

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