Buyouts, leaves for 28% at Southwest Airlines

More than a quarter of all Southwest Airlines employees volunteered to take buyouts and extended leaves of absence as the Dallas-based carrier tries to avoid furloughs because of COVID-19.

In a Monday audio message to employees, CEO Gary Kelly said 16,895 employees took one of the two options. That represents about 28 percent of the airline’s employees.

“I’m incredibly grateful to those of you who answered the call,” Kelly said. “I know there are stories behind every one of those 16,895 decisions — from your incredible history at Southwest Airlines, to stories of what’s ahead in your next phase. And I personally know a lot of those stories, and it is a bittersweet moment for us, for sure.”

Some 4,400 employees opted to take voluntary separation packages, and 12,500 signed up for the extended leave, which amounts to six, 12 or 18 months away from work, Kelly said.

Southwest has about 60,000 employees in the U.S. and a handful in foreign countries where it flies.

The news of the buyouts comes as air traffic in the U.S. begins to stall with a surge in coronavirus cases. About 30,000 fewer passengers a day are boarding airplanes than they did a week ago, according to numbers from the Transportation Security Administration.

Southwest will likely accept all the buyouts, Kelly said. The company still has to decide which employees will get extended leave, but it will likely be almost all of them.

Southwest and other carriers have been desperately trying to reduce workforce numbers for the dismally low number of passengers flying. Passenger traffic is still 70 percent lower than it was last year, according to the TSA, and the industry isn’t expected to recover sufficiently by Oct. 1, when stimulus grant money for airlines runs out.

Fort Worth-based American Airlines last week issued 28,000 furlough notices to unionized mainline and regional employees. That was after 36,000 notices were sent out by Chicago-based United Airlines the week before. American already trimmed its corporate and support staff by about 5,000.

Kelly and other airline executives said they expect flying to be down about 30 percent in the fall and that staffing will have to be reduced by a similar percentage to put the industry on better footing.

Southwest has taken $2.1 billion in stimulus grants and $1 billion in loans, which included stipulations that airlines can’t lay off or furlough employees or cut pay and benefits through the end of

September.

But when that $2 trillion package was signed at the end of March, few expected that much of the world’s economy would still be stymied in late July. Southwest has also been approved for billions more in loans, but Kelly said it isn’t clear if the airline will take them.

According to documents shared with employees, most Southwest employees with more than 10 years at the company would get a year’s pay and four years of flight privileges if they opt for the voluntary separation.

Southwest is among the airlines that have made major changes to the way they operate, including more frequent cleaning, hundreds of parked planes and reduced capacity on planes so no one has to sit in middle seats.

However, analysts have pointed out that it’s difficult for airlines to be profitable flying planes at reduced capacity.