Southwest Airlines told another 402 mechanics and other employees Wednesday that they could be furloughed in January as the carrier tries to negotiate cost cuts with union groups.
Dallas-based Southwest, which is anticipating billions of dollars in losses next year due to the COVID-19 pandemic, is pushing for 10% wage cuts from union employees after already cutting pay for non-union workers and management for 2021. Company leaders say that without pay cuts, they’ll have to furlough workers — a first in the airline’s 50-year history.
The workers issued furlough warnings are represented by the Aircraft Mechanics Fraternal Association and include mechanics, facilities maintenance technicians and employees who clean airplanes. The furloughs are scheduled to start Jan. 25 if Southwest can’t get a deal with the union or Congress doesn’t pass payroll stimulus for airlines.
Southwest also issued another 1,503 warnings to other AMFA members that they’re at risk for furloughs if bumped by more senior employees at other locations.
The airline already issued warnings to 42 materials specialists on Nov. 6 for employees who maintain stock for aircraft maintenance.
“We have been engaged with our unions since early October seeking pathways to help us reduce our costs, and it is unfortunate that we had to move forward with this outcome, as the affected employees are valued members of the Southwest family,” Southwest vice president of labor relations Russell McCrady said in a statement. “We are not closing the door to further discussions, but we need agreements to be reached to help us save these employees’ jobs and address the extremely challenging economic conditions we face.”
Union members would have to approve taking pay or benefit cuts under existing collective bargaining agreements with the company. Those contracts also protect workers from permanent layoffs by granting them recall rights.
The WARN notices, required by federal and state law to give workers notice ahead of large layoffs, don’t mean layoffs are imminent but lay the groundwork in the event that an employer does need to cut workers.
Competing carrier American Airlines, based in Fort Worth, has already furloughed or laid off 19,000 union and non-union workers as it faces similar struggles with a lack of air travel demand during the COVID-19 pandemic.
Southwest lost $1.2 billion in the second quarter and is still burning through about $11 million of cash a day. CEO Gary Kelly said last month that the company is about 20% overstaffed and will need to cut salaries and other costs if it hopes to stop losing money.
Negotiations have been tense so far with unions. Pilots and flight attendants have pushed Southwest to come up with options other than cutting salaries. Lyn Montgomery, president of Transport Workers Union Local 556 representing flight attendants, said cutting salaries won’t fix Southwest’s problems, which come down to having too many employees and not enough customers.
“Gary (Kelly) acknowledges that this is a demand problem,” Southwest Pilots Association president Jon Weaks said in an interview last week. “This is where the company is going to have to do a lot of soul searching.”
Unions have also taken issue with “force majeure” contract language that could allow the carrier to alter a deal due to unforeseen circumstances. Almost everything about the COVID-19 pandemic has been hard to predict, union leaders said.
Kelly said cutting costs is the only way to avoid massive deficits the company is facing next year as the airline industry struggles to climb out of the hole carved by the pandemic.
Some unions are critical of Southwest for stockpiling $13.4 billion in cash that they say could be used to pay workers. But Kelly and other Southwest leaders contend they need that cushion to keep the airline operating. Most of that money comes from loans and aircraft leases the company has pursued since the beginning of the pandemic.
Kelly told employees in an audio message this week that the company has already factored a potential vaccine into financial projections for 2021.
“It doesn’t mean we can stop pursuing cost reductions and revenue enhancements,” Kelly said. “We’re still facing a billion dollars in overspending this year.”
