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Southwest Airline CEO Announces Pay Cuts to Avoid Layoffs Through 2021

Author : Pankaj Singh | Published Date : 2020-10-07 

Gary Kelly, the CEO of Southwest Airlines, stated that if union workers agree to pay cuts, the enterprise can avoid layoffs and furloughs at least through 2021.

Kelly warned the airlines could be enforced to follow rivals and lay off numerous employees due to the crisis caused by the coronavirus pandemic in the absence of an extension of federal payroll support, which the administrators endure negotiating in Washington.

If the company gets the federal relief, the airline would cease or reverse the pay-cut efforts, Kelly added. However, without one more payroll support package, cost savings should be in place for all employees by 1st January 2021.

The CEO is decreasing his base salary to zero through 2021 and will continue a 20% cut in the pay of senior executives through the following year. The airline is also decreasing the salaries of all leadership groups by 10% till 1st January 2022, when he confirmed they would return to the current level.

The airline company is approaching union representatives as well for concessions and hoping for speedy agreement.

While the CEO was grateful for the previous six months' support, he stated that it did not go far or long enough, with domestic air travel decreasing to ‘1970s levels’ during the coronavirus pandemic, down to 70% from last year.

Kelly claimed that the company does not have time for lengthy, drawn-out, complicated negotiations. The spending and cost have been cut off dramatically at the company, but not close enough to balance a 70% revenue loss. He expressed that wages, salaries, and benefits are undoubtedly the companies’ largest cost entities and it will have to obliterate a large swath of wages, benefits, and salaries to match the low traffic levels to have some hope of breaking even.

United Airlines and Rivals American Airlines have already started furloughing 32,000 employees.

 

Source: https://www.cnbc.com/2020/10/05/southwest-ceo-says-it-can-avoid-layoffs-through-2021-with-employee-pay-cuts-.html

https://www.foxbusiness.com/economy/southwest-ceo-outlines-plan-to-avoid-layoffs-furloughs-through-2021

About Author

Pankaj Singh

Pankaj Singh

Endowed with a post graduate degree in management and finance, Pankaj Singh has been a part of the online content domain for quite a while. Having worked previously as a U.K. insurance underwriter for two years, he now writes articles for fractovia.org and other online portals. He can be contacted at- [email protected] | https://twitter.com/PankajSingh2605

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