Southwest Looks to Pay Cuts to Navigate Pandemic

Southwest Airlines  (LUV) – Get Report is looking to take a different route as it navigates the coronavirus pandemic and steep drop in air travel, announcing plans to implement management pay cuts and seek concessions from its labor unions to avoid furloughs and layoffs.

The Dallas-based airline said it was asking its labor unions to accept pay cuts to prevent furloughs and layoffs as federal aid expires. Airlines were barred from furloughing or laying off workers until Oct. 1, under the terms of the $25 billion in federal aid they received earlier this year.

In a video message to employees, Southwest CEO Gary Kelly warned that the airline 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.”

Southwest is looking to take a different route than its rivals in navigating the ongoing pandemic and its unprecedented impact on airlines’ balance sheets, seeking to avoid the types of mass layoffs that rivals including American Airlines  (AAL) – Get Report and United Airlines  (UAL) – Get Report have already said they will have to implement if Congress doesn’t come up with a new industry aid package.

Source Article