Is Southwest the Best Union Airline?
The airline has never laid off workers and COVID-19 isn't changing that
COVID-19 has hit airlines hard. Ridership is way down and it is not expected to increase to pre-pandemic levels for the rest of 2020. In response, many airlines have begun laying off staff. One airline, Southwest, has decided to buck the trend.
In a letter sent to their employees on July 24th, CEO Gary Kelly said the company does not intend to pursue furloughs and layoffs, or pay and benefits cuts, through year-end. This was because of some good business decisions and a strong offer that encouraged nearly 17,000 employees’ to take an early retirement or extend leave of absence. TWU 556, which represents workers at Southwest, estimated about 5,000 of those who took a deal from the company were flight attendants and members of their union.
Southwest Airlines CEO Gary Kelly, in a new memo to workers: "We will not furlough or layoff any Southwest Employees on October 1, unlike our major competitors." pic.twitter.com/eoKMez8Kfi
— Pete Muntean (@petemuntean) July 26, 2020
While other companies sought to cut larger staff numbers while not making other cuts, Southwest appears to have done everything in their power to save jobs. The company, which has lost $1.6 Billion due to the virus, sold $2.2 billion in company stock, cut shareholder returns, and borrowed more than $12 million from lenders. They also received $3.2 billion from the CARES Act. The company also is helped by their commitment to preparing for the future. Kelly says that Southwest has stocked away about $14 billion “in the bank” which they will use to make up for any losses. They estimate that at the current rate, Southwest would be able to run for two years off of just the money in their bank account.
Southwest has been flying for 49 years. Amazingly in that time the company has never had a round of layoffs or furloughs. This is amazing considering that in just the last 20 years, airlines have faced major challenges including 9/11 and two recessions. Meanwhile, American Airlines has issued 28,000 layoff notices and United said they may need to lay off as many as 36,000. These cuts come after the airlines offered retirement incentives. Layoffs at American and United are expected after October 1, when the CARES Act money runs out.
“For some that have taken the extended leave, they don’t want to fly right now or they have an at-risk family member at home,” TWU 556 President Lyn Montgomery said. “Some really love Southwest Airlines and wanted to take that personal sacrifice.”