By Tracy Rucinski
(Reuters) – Southwest Airlines can avoid furloughs and layoffs through 2021 if union workers agree to pay cuts, Chief Executive Gary Kelly said in a message to employees on Monday that detailed the devastating impact of the COVID-19 pandemic on the industry.
Rivals American Airlines and United Airlines began furloughing 32,000 employees last week when a ban on job cuts expired without fresh federal aid. Southwest, which has never furloughed any workers, has said it may have to follow suit absent fresh federal relief or employee concessions.
“We would have to wipe out a large swath of salaries, wages and benefits to match the low traffic levels, to have any hope of just breaking even,” Kelly said, warning that quarterly losses could be in the billions until there is an effective vaccine that becomes widely available which he does not expect until late next year.
Airlines have asked Washington to extend a $25 billion payroll support program through March in the hopes of protecting jobs while the industry battles a 70% decline in air travel.
U.S. House Speaker Nancy Pelosi on Friday said a deal was “imminent,” and talks with Treasury Secretary Steven Mnuchin for a broad COVID-19 relief deal were continuing this week.
If legislation passes, Kelly said Southwest would reverse any pay cuts..
But without federal aid, he said cost savings must be in place for all employee groups by Jan. 1, 2021.
Kelly is reducing his base salary to zero through the end of 2021 and continuing a 20% cut in senior executives’ pay through next year. The airline is also reducing all leadership group salaries by 10% until Jan. 1, 2022, when he said they will return to the current level.
Now the company is hoping for a quick agreement with union groups, he said.
Unions representing pilots, flight attendants and mechanics did not immediately comment.
Reporting by Tracy Rucinski in Chicago; additional reporting by Ankit Ajmera in Bengaluru; Editing by Anil D’Silva, Nick Zieminski and David Gregorio.