Nearly 30% of Southwest Airlines’ employees have expressed interest in taking unpaid long term leave or early retirement. Southwest CEO Gary Kelly recently confirmed the numbers in a staff video conference. He says 16,895 employees put up their hand for unpaid leave or early retirement after the airline put the call out to avoid forced layoffs.
“In total, 16,895 Employees expressed an interest in these voluntary programs. That’s 28% of our workforce,” Mr Kelly was reported saying on CBS DFW.
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Good take-up of early retirement and unpaid leave offer
In 2019, Southwest Airlines had over 60,000 employees. The airline has worked hard to avoid forced layoffs after the CARES Act funding runs out at the end of September. In late May, Southwest Airlines reached out to its employees, offering generous early retirement and extended unpaid leave packages.
“It is clear that for the near future, we are currently overstaffed. It’s imperative that we bring our employee numbers down, voluntarily.
“Given our current situation, my No. 1 goal is to protect the future of Southwest Airlines and do my best to provide job security for our employees,” said the Southwest CEO at the time.
Nearly two months later, approximately 4,400 employees have requested early retirement, and a further 12,500 employees asked for either six, 12, or 18-month leave packages.
Mr Kelly said almost all of the early retirement requests would go through. How many of the extended leave requests would be granted remains under consideration.
“Overall, I’m very pleased with the response to these programs,” said Mr Kelly. He noted approximately 24% of Southwest pilots and 33% of flight attendants had asked to take either early retirement or extended unpaid leave.
Southwest Airlines working hard to avoid forced layoffs
Mr Kelly had said passenger numbers would need to triple over the next few months if Southwest Airlines was to avoid forced layoffs. It was a scenario the airline was keen to avoid. Southwest Airlines has operated for nearly 50 years. So far, it has never had to lay off workers forcibly. It’s a record the airline is proud of and doesn’t want to blemish.
But as the operating environment for airlines in the United States struggles to improve, there was a real likelihood Southwest would have to wield the redundancy ax. It’s no wonder Gary Kelly is pleased with the response.
Most US airlines in the same boat as Southwest Airlines
Southwest Airlines is not the only airline faced with the difficulties of downsizing its workforce. Among many airlines, Delta was looking to cut its pilot numbers by 2,500. It is believed 2,234 Delta pilots have since put their hand up for early retirement. United has flagged that it may need to cut its workforce by 36,000, or 40% of total numbers. American Airlines is suggesting approximately 25,000 of its employees may lose their jobs once CARES Act funding ends.
Gary Kelly’s drive to reduce employee expenses is part of a broader program to fortify Southwest Airlines against plunging travel demand. It helps that Southwest Airlines is in a better position than many of its competitors. It has a reasonably healthy and clean balance sheet in addition to a declining daily cash burn rate. The airline is in a position to ride out several more months of low passenger demand.
Meanwhile, Southwest Airlines will release its second-quarter 2020 financial results on July 23.