Frustrated with efforts to secure wage cuts from pilots, flight attendants, and other employees, Southwest Airlines (NYSE:LUV) on Thursday put wheels in motion to furlough up to 6,828 employees early next year.
Southwest and other airlines have been hit hard by the pandemic, with industry revenue expected to be down 65% or more year over year in the current quarter. The industry has been busy cutting costs, but Southwest to date has been able to avoid layoffs thanks to voluntary retirements and workers agreeing to take extended leaves of absence.
Southwest CEO Gary Kelly in October called unions back to the table, saying workers would need to “sacrifice more” if furloughs were to be avoided. But those talks have gone nowhere, and the airline, according to a report in the Dallas Morning News, has issued furlough warnings to flight crews.
While layoffs and furloughs have been common during downturns throughout aviation history, Southwest stands out because it has never furloughed an employee in its 50-year history. But the company — in issuing Worker Adjustment and Retraining Notices (WARN) to 1,221 pilots, 1,500 flight attendants, and about 4,100 other employees — said furloughs are on the horizon absent a deal on cuts.
The furloughs would come as early as March 15 or April 1, according to the report.
Even though the WARN notices have been issued, furloughs are not a foregone conclusion. Southwest has said if it can get union workers to agree to 10% pay cuts or come up with other ways to save money, the furloughs can be avoided.
The article originally appeared in the Motley Fool.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.