Southwest Begins To Worry About The Future As Furloughs Loom

As airlines continue to grapple with the decrease in demand brought on by the coronavirus pandemic Southwest Airlines is warning its employees that furloughs might be just around the corner. Founded in 1967 as a Texas commuter airline, Southwest has never in its 50-plus year history had to lay off an employee, until perhaps now.

Southwest Airlines plane
Southwest needs to triple current passenger numbers. Photo: Getty Images

In a message to employees on Monday carried by Fox News Southwest CEO Gary Kelly warned staff that, due to COVID-19 and the resulting loss in passenger traffic, the airline is likely to conduct its first-ever round of involuntary layoffs.

“The recent rise in COVID cases and increases in regional restrictions on businesses and states requiring quarantine aren’t positive developments for our business,” said the CEO.

Across the industry, air travel traffic is down about 73% from pre-coronavirus levels. And because of this while “furloughs and layoffs remain our very last resort, we can’t rule them out as a possibility in this really bad environment,” Kelly said. 

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Kelly told employees to prepare for the worst

While hoping for a change in passenger numbers but facing the reality of the situation, Kelly told employees to prepare for the worst possible outcome. The 65-year-old airline boss urged Southwest employees to apply for “voluntary separation” or “extended time off.”

Doing this would help Southwest Airlines cut its running costs and not revert to the layoffs that Kelly was talking about in his message to employees.

Southwest’s CEO Gary Kelly tells employees to prepare for the worst. Photo: Getty Images.

Financial news service Bloomberg said yesterday that if Southwest cannot cut expenditures, the airlines’ next move would be pay cuts and reduced benefits for its employees. If this then proved not to be enough, Southwest would break a half-century record of never laying off a single employee despite turbulent times in the past.

“We need a significant recovery by the end of this year … roughly triple the number of passengers from where we are today,” said the CEO.

COVID-19 cases are on the rise

Given the current situation and especially the rise in the number of coronavirus cases in Texas and Arizona, it’s hard to imagine the number of passengers Kelly talks about ever coming to fruition. The apparent solution is involuntary layoffs so that the airlines can survive the crisis.

When speaking about the upsurge in cases in the United States, Kelly added that the “recent rise in COVID cases and increasing regional restrictions on businesses and states requiring quarantine aren’t positive developments for our business, and we are concerned about the impact on already weak travel demand.”

United is warning employees

While Southwest Airlines might be in the news today, they are not alone with every American carrier knowing that flight frequencies will need to be reduced. With a reduction in the number of flights, airlines no longer need the same amount of staff, which is why redundancies are looming across the industry.

United planes SFO
United Airlines may lose 45% of its workforce. Photo: Getty Images

Last week Chicago-based United Airlines said it was preparing to send notices of potential furloughs to 36,000 of its U.S. based employees. It would equate to around 45% of United’s employees being furloughed if that were to happen.

United was eager to point out that not everyone who received a notice would be furloughed. The furloughs would be timed to begin on October 1, the same day that government aid for airline workers expires.

October 1 may go down in history as one of the worst days in American aviation as airlines across the nation slim down to battle what could be a harsh winter for air travel.

What do you think will happen once the government aid stops? Please let us know your predictions in the comments.