Southwest employees accept pay cuts to avoid furloughs


Southwest Airlines Co.

LUV -0.70%

The company is asking trade unions to accept a pay cut for the first time to prevent furloughs and layoffs by the end of next year.

Airlines have begun to take more drastic action, as hopes of receiving more federal aid to cover labor pay have dimmed for another six months, with Congress still at an impasse over additional epidemic relief. Southwest chief executive Gary Kelly, who had been receiving lower salaries since March, said on Monday he would withdraw his salary completely by the end of next year.

Airlines were barred from furloughing or laying off workers until October 1 under a $ 25 billion aid earlier this year. With travel demand still 70% lower than a year ago, airlines say they can’t justify retaining employees they don’t need in cash. When sanctions with government aid expired last week, rivals including American Airlines Group Inc.

And United Airlines Holdings Inc.

Proceeded with more than 32,000 cuts.

The Southwest has never misbehaved with employees nor resolved to avoid those measures this year. But Mr Kelly warned last week that furlough would be mandatory without additional federal aid. He said on Monday that quarterly losses could be “in the billions” until an effective vaccine has been widely distributed, possibly not until the end of next year.

“We can’t wait any longer,” he said in an interview. The airline says it could prevent job losses through next year, if conditions are reached by January with its unions. 1. “I think we have a moral obligation.”

Following an unprecedented drop in air travel due to coronaviruses, passenger airlines are being forced to make long-term, make-or-break decisions on times of great uncertainty and minimal cash flow. So how do they plan to survive? The WSJ detects. Overall: George Downs / The Wall Street Journal

The union, representing the pilots of the Southwest, said it had agreed to consult with the company. However, in a letter to the pilots, union leaders have so far criticized the company’s actions and expressed skepticism that the concessions would greatly boost the bottom line.

He said, “Agreeing with discussions is very different from agreeing to concessions.” “” We should not be in any hurry to make small moves when we do not need to take clear decisions. ”

Unions representing the Southwest’s flight attendants and several other groups of workers also indicated resistance to the concessions.

“It’s a slippery slope and we have no intention of slipping it down,” said John Verselson, international president of the Transport Workers Union.

Mr Kelly said he still feels Congress will strike a deal for pandemic relief, including a provision that will cover the airline’s salary by the end of March. If this happens, any cuts agreed with the unions will be reversed.

“These are not bailouts. It is trying to keep the country out of depression, ”he said.

Other airlines have said that they will bring back more support workers in the coming days. Negotiations over a comprehensive epidemic relief package continued on Monday, with attempts to pass a narrow bill focused on airlines falling only early on Friday.

Mr Kelly said he would go without his salary until the end of 2021. Senior executives will continue to make 20% pay cuts during that time, and their non-employee employees will have a 10% reduction in their salaries to avoid layoffs.

Other airline executives including United and Delta Air Lines CEOs Inc.

Has given up his salary through this year. The chief executive of American is paid only in stock.

The carrier has had varying success in reducing forced cuts through early retirement deals and negotiations with unions. Some 20% of Delta’s employees opted to leave, and the airline has reduced working hours for its ground staff by 25%. These measures helped flight attendants, mechanics, and most other front-line employees avoid any kind of problem. The airline said that its pilots would be delayed by a month to continue negotiations with their union.

United, which is hiring more than 13,000 employees, reached an agreement with the pilots to delay any cuts until June.

Write Alison Sider to [email protected]

Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Print edition as ‘Southwest Actions Unions to Pay Cuts’, screened on October 6, 2020.

.

Leave a Reply

Your email address will not be published.