Southwest warns 6,800 employees of impending layoffs, a first for the airline

ByPete Muntean, Gregory Wallace and Chris Isidore, CNN Business
Thursday, December 3, 2020
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Southwest Airlines warned 6,800 employees Thursday they may be furloughed in the spring, the airline told CNN.

If the layoffs do take place, they would be the first in the carrier's nearly 50-year history.

The total includes 2,551 ground crew members who handle baggage, cargo, and restocking planes, as well as 1,176 customer service agents, 1,500 flight attendants and 1,221 pilots. The airline said the cuts would take place on March 15 or April 1 for different groups of employees.

US airlines, including Southwest, received a total of $25 billion in federal help earlier this year with the condition that they not institute any involuntary job cuts through the end of September. United and American Airlines furloughed 32,000 employees between them on October 1, the day that prohibition ended.

Delta Air Lines has avoided involuntary job cuts because employees took voluntary buyouts and early retirement offers, and its pilots agreed to changes in their contract that would reduce labor costs. But some 16,000 other job cuts have been instituted or planned across the rest of the airline industry before Thursday's announcement from Southwest.

Southwest has typically been among the most profitable major US airlines. But it has reported losses of $2.75 billion through the first nine months of the year, which also puts it on track for its first annual loss.

Over Thanksgiving, US airlines had their busiest week since mid-March, when the pandemic brought air travel to a near halt. But United, Southwest and American have all warned investors that they are seeing a new drop in bookings as Covid-19 cases have risen nationwide, and public health experts have urged people not to travel during the holidays if possible.

Southwest has asked the 12 unions representing the 83% of its employees who are unionized for approximately 10% pay cuts to avoid furloughs. The airline told CNN it has reached agreements with its meteorologist and dispatcher unions.

An internal memo to employees noted that the airline is open to pay cut agreements with other union groups that would avoid the 6,800 looming furloughs in 2021.

The memo said "we are not closing the door - we'll continue negotiations if union representatives want to continue working toward reaching mutually agreeable solutions."

Southwest's major unions quickly objected to the company's planned furloughs and said they will continue to fight to save the jobs.

"While this development is not completely surprising it is incredibly disappointing to our pilots and their families," said Captain Jon Weaks, president of the Southwest Airlines Pilots Association. The union "remains committed to finding solutions that will dissuade the company from taking any further steps towards furloughs."

He said that the pilots union had made several offers that meet the company's savings target, but the company made no counter offers.

Southwest's stock symbol has always been LUV, for Love Field Airport, which is the company's home base in Dallas. The Transport Workers Union, which represents Southwest flight attendants among others employees, said the notices to employees made Thursday the "the day the 'LUV' died."

"Southwest Airlines has approximately $15 billion in cash on hand and is predicted to be the first airline to emerge in making money for its shareholders," said Dan Akins, airline economist and an advisor to the TWU. The union said that it has made additional cost savings proposals, and that thousands of Southwest flight attendants would be willing to take additional unpaid leave in order to save jobs.

"The opportunity to help save our members' jobs is all we're asking for," said Lyn Montgomery, president of the TWU unit that represents Southwest's flight attendants and a career flight attendant herself. The TWU members "have been the front line workers in the air during this pandemic, helping to ensure the safety of transportation infrastructure critical to this country and to business, and their skills are necessary as this company expands to additional destinations."

The Aircraft Mechanics Fraternal Association said it is filing for arbitration to stop the furloughs, which it said is its right under the contract since Southwest has been outsourcing some of the mechanical work at the airline.

Several airline unions continue to lobby Congress for a stimulus bill that includes payroll funding for their employees. But despite bipartisan support there has so far been no additional help for the industry approved by Congress.

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