Southwest Airlines Won’t Furlough Anyone Through 2021, Will Spend Airline Aid On Employees

Southwest Airlines hasn’t furloughed any employees during the pandemic. They’ve warned, though, that since business hasn’t picked back up to more than half of what it was last year that they either needed 10% pay cuts or furloughs.

The pay cuts would have given the company half the savings of furloughs, but they preferred to keep their nearly 50 year track record of no furloughs (for the company culture) and have employees all active positioning the airline to return to growth.

Southwest is likely to get nearly $2 billion out of the federal government’s new $15 billion airline subsidy, along with a requirement that they keep all of their current employees on payroll through March 31. The airline now says it will not furlough anyone in 2021.

  • Furloughs would have taken place between March 15 and April 1.

  • Savings would have accrued after that, when the terms of their subsidies allow them to furlough workers. Thus they believe they’ll still have too many workers in place April 1 onward.

  • Yet they aren’t going to furlough anyone, even though they can.

  • The bailout gives them at least double what the furloughs would have saved them in 2021.

[CEO Gary] Kelly said the extension of PSP was always the airline’s “preferred plan” and that “it means we can stop the movement toward furloughs and pay cuts that we previously announced. For that, I am most grateful.”

“The new law will provide payroll support for all Southwest Employees through March 31, 2021. Given this, we currently do not anticipate the need to conduct any furloughs or pay cuts next year,” Kelly said in a memo sent to Southwest staffers on Monday.

Put another way, Southwest really is going to spend some of the bailout money on employees (perhaps 50%) which is how the government aid was sold – unlike United Airlines which is likely to receive about $3 billion and plans to only pay its 16,000 furloughed workers through March as-required keeping the rest of the taxpayer money for themselves and their shareholders.

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. At least one of the airlines is trying to make an attempt at doing the right thing. It’s absurd that congress did not put strings on the money that it had to be paid to “working” flight crews. Not that any of them have done much in the past 10 years. The more laziness is rewarded the lazier they will become although if they get much lazier they will have to take out seats and put in cots for them. Everyone needs to spread the word about how our tax dollars are being spent!

  2. I do not have the business acumen to judge Southwest’s corporate decisions.

    I will say I do not fly Southwest for the following reasons.

    1. I dislike reminders of Kindergarten, which Southwest’s boarding process triggers, even if I am in position A1. As a BIPOC, I often need to show White flyers in the A1-A5 group that I am truly A1.

    2. I never check bags, so I am essentially subsidizing other passengers who do.

    3. There is zero chance of a first class upgrade. Even on airlines where I have no frequent flyer status, if there is a first class cabin, I could be upgraded for operational reasons.

    4. The Wifi on Southwest planes is incredibly slow, which limits my productivity.

  3. @Jason those are all valid reasons for you and why it’s great we have choice. For each that you value there is someone who values differently.

  4. “will spend airline aid on employees” is an irrelevant statement. The bill says the money cannot be used for anything else and that you can’t furlough anyone during the time period

  5. @John – United Airlines is only going to employ 16,000 people that they wouldn’t have without $3 billion in subsidies. Southwest will actually spend about a billion dollars that they wouldn’t have spent without the $2 billion from the government.

  6. Gary,
    there was no assurance that WN would have succeeded at gaining concessions from labor and actually quite a bit of doubt they would have achieved it. Using your own employees’ employment as bargaining chips to gain government money is just as detestable.

    I don’t disagree that UA is doing the bare minimum to get the federal cash but to try to create moral rankings based on possible financial gains at the expense of the American taxpayer is just. plain. wrong.

    Economic forces need to be allowed to run their course in the airline industry. Every additional aid package not only delays that from happening but makes the inevitable harder when it finally does happen.

    When small businesses across the country are facing shutdowns, aid to airlines for paying salaries of employees that are on average above average compensated is beyond objectionable to the majority of the American workforce.

  7. The problem the big 3 have is that they have a bunch of expensive widebody jets which are barely flying, and mostly with cargo when they do. Someone has to make payments on those places. Southwest is lucky to be flying only 737s, where Boeing has had to pay for what would have been surplus capacity through the grounding of the MAX fleet. While Southwest will have to start paying for that fleet, it will be a while before they are all ungrounded, with hopes that air traffic will pick up as they take road planes out of storage, and slowly get deliveries.

  8. John H
    the big 3 are all extensively flying widebodies on their domestic and Caribbean networks as well as on cargo only flights in addition to their limited transoceanic networks.

    The US is one of the few markets in the western world where a significant amount of capacity has remained in service even if demand is lower.

    and most of the US widebody capacity is pledged to serve the military if needed. There is a certain amount of capacity that is needed to serve economic rebuilding purposes but probably a much higher amount of widebody capacity is needed for reserve defense purposes.

    And the US3 are also flying military charters now – as they usually do.

  9. Some very interesting comments about the “big 3” and Southworst.
    Since apparently some now seem to care that all four of these airlines are United States Airlines because they are getting government money. If “Gary” is really trying to slam any of the “big 3” for not spending every cent on employees how about we have some other kind of gauge. Why not look at how much maintenance each of these four do on their own planes versus sending it out and to Central America??? Does any American care here certainly not Gary because this has been brought up to him sooooo many times its ridiculous.
    Southworst clearly should NEVER it be said that they have American mechanic jobs as any kind of a priority period. American Delta and United all still have after the lay offs more that twice as many maint. personal than Southworst. Always have and probably always will and yet all four airlines have close to the same amount of aircraft. Don’t be bamboozled by someones hatred for one of the “big 3” as its stated on this site every so often.
    REMEMBER THIS WHEN YOU GO TO BUY YOUR AIRLINE TICKET.

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