Throughout its nearly 50-year history, Southwest Airlines has never had to furlough an employee. But COVID-19 represents a unique and burdensome challenge. While Southwest is not out of the woods yet, an outpouring of support from employees may again help Southwest to avoid forcing people out of a job.
More Than 25% Of Southwest Employees Are Ready To Support Company By Leaving
16,895 of about 60,800 employees at Southwest Airlines have agreed to leave the carrier, via retirement, a voluntary exit package, or extended unpaid time off.
Southwest CEO Gary Kelly called this a “bittersweet moment” but added, “I’m very pleased with the response.”
To be sure, it is not pure altruism at play. Early separation packages have clearly been attractive. In fact, Southwest described its buyouts as the “most generous buyout package in our history.” As The Dallas Morning News reported:
“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 early retirement. Pilots would get paid about two-thirds of their average salary for five years or until they hit 65, whichever comes first. Early retirees would also get a year of company-paid health insurance.”
That’s nothing to scoff at.
The Southwest Furlough Battle Is Not Won…
Last week, Kelly told employees:
“The recent rise in COVID cases and increasing regional restrictions on businesses and states requiring quarantine aren’t positive developments for our business. We need a significant recovery by the end of this year—and that’s roughly triple the number of passengers from where we are today.”
That was on July 13th. A week later, tendlines are looking worse, but more importantly demand is continuing to drop. While Southwest still plans for a full schedule by end of year (with a higher concentration on domestic routes), it is far too early to tell how the pandemic will develop. Southwest will announce quarterly earnings on Thursday, which should give us more insight into next steps.
While American and United have failed to gain traction in terms of convincing a sufficient number of employees to voluntarily depart, it seems that Southwest is at least on track toward doing so. That’s a testament to the Luv (Southwest’s stock ticker) employees have for the health of their company and the leadership that made such concessions possible.