Southwest Airlines will ask union workers to take pay cuts amid the COVID-19 pandemic that affected the airline business.
Latest COVID Fallout for Travel Industry - Paycuts at Southwest
The Southwest Chairman and CEO Gary Kelly said they “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,” unless they receive funding from the federal government.
According to Union officials, Southwest should find options other than pay cuts.
Recently, the fourth-biggest US carrier by revenue Southwest Airlines reported they were burning about $17M daily. During Q2, the company lost $915M and borrowed billions while cutting back on flights to save money.
The CEO Gary Kelly said he won’t receive a base salary through 2021, and non-union employees will get a 10% pay cut on Jan. 1 to avoid dismissals through 2021. At the same time, the airlines will negotiate similar cuts from union workers, who represent about 85% of the employees.
In June, the Southwest Airlines employees totaled 61,000, however, at least 4,200 agreed to leave, and 12,500 more took long-term leaves of absence.
After the Congress approved $50 billion worth of funding in cash and loans in March, the US airlines are now applying for an additional $25 billion in taxpayer relief to pay their employees for the next six months. According to the Southwest CEO Gary Kelly, if the Congress approves it, the pay cuts would be canceled.
Flight attendants at Southwest Airlines began contract negotiations a long time before the COVID-19 pandemic. According to President Lyn Montgomery, Kelly’s remarks should encourage union members to push lawmakers for additional federal relief “before we go down the road of cracking open our contracts and taking out pay and quality-of-life benefits that took us decades to earn.”
Montgomery also added that Southwest’s 17,000 flight attendants have already left or taken extended leaves, and those who remain “are worried about both jobs and (contract) concessions” during the coronavirus pandemic.