Economy

Southwest CEO announces wage cuts to avoid layoffs and furloughs through 2021

in a Video For Monday employees, Southwest CEO Gary Kelly He declared that the airline would need to “sacrifice more” through submission Pay wages Try to avoid Layoffs and vacations Until 2021 mid Corona Virus The epidemic is continuing on Travel the demand.

The announcement comes as the aviation industry is demanding an extension of the payroll support program designated under the Coronavirus, Relief, and Economic Security (CARES) Act passed by Congress in March after the $ 25 billion bailout expired on October 1. .

Kelly noted that since the PSP expires, Southwest “simply cannot afford the conditions required to maintain full pay and employment,” Kelly said.

He applauds his staff, saying that they “all did great,” calling them “our heroes,” but the CEO for 12 years said, “Now is the time for us to do what needs to be done to save Southwest Airlines.”

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While Kelly said he was still grateful for the six months of backing up his previous payroll, he said it had “not gone far enough or long enough”, with domestic air travel dropping to “1970s levels” during the pandemic, down 70% from a year ago. .

“Cost and spending have been cut dramatically in the Southwest, but not enough to offset the 70% loss in revenue,” Kelly noted. “Salaries, wages and benefits are our biggest cost component, and we would have to eliminate a wide range of salaries, wages and benefits to match the low traffic levels for us to have any hope of breaking even.”

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He also warned that the airline’s quarterly losses could reach billions until a vaccine is available and distributed, and it can “effectively kill” the virus, which may not last until late next year.

“We had hoped that the federal government would move quickly again, but they did not, and that is disappointing,” Kelly added. “We have pushed hard and have massive support for expanding PSP, so it’s disappointing that we haven’t seen any legislative action yet.”

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Effective immediately, the already-reduced base salary for Kelly will be zero, which will continue through the end of 2021. Meanwhile, previous cuts to Southwest board fees and the base salary for airline executives, which have already been reduced by 20%, announced It will remain so until the end of next year.

In addition, the base salaries for the remaining leadership groups will be reduced by 10% from January 1, 2021, through the following year. The cuts will also affect noncontract employees in Southwest in an effort to avoid layoffs until at least the end of next year.

While Kelly promised union employees his goal was to avoid furloughs, he warned that the option would be used as a “last resort” if Southwest and its unions fail to reach an agreement on reasonable concessions.

“We simply don’t have time for long, drawn-out negotiations, and I have instructed our company’s team to follow a simple approach,” Kelly said.

He added that if the PSP is extended until next March, efforts to cut wages will be halted or canceled.

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Kelly stressed that the company is focusing on increasing traffic, recovering old customers and acquiring new customers, noting that the company “plays a deceptive role” by adding new cities to its schedule.

“If we allow leave, we will have to delve deeper into making sufficient savings and reducing our ability to act against our goal of increasing traffic,” said Kelly. “We need to save costs and people. It’s that simple.”

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The Southwest plan comes as its rivals have already begun laying off the workforce.

ribbonSafetythe lastThey changeThey change%
LoveSouthwest Airlines38.49-0.27-0.70%
UALUnited Airlines HLDG.36.20+0.19+ 0.53%
AALAmerican Airlines Group13.12+0.12+ 0.92%

United Airlines He said The stimulus impasse on Capitol Hill has forced 13,000 employees to leave While American Airlines she has Vacations started for 19,000 employees.

Southwest stock closed at $ 38.49 per share at the end of Monday’s trading session and fell slightly during the post-close trading session.

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