Southwest Airlines CEO Gary Kelly told employees Thursday that the Dallas-based airline may still have to furlough workers or cut wages and benefits if the aviation industry doesn’t get another round of economic aid.
Southwest, which has said it won’t furlough employees this year even as competitors began letting go of workers Thursday, is still lobbying for Congress to extend the Payroll Support Program that gave $25 billion in grants to airlines to cover worker costs and another $25 billion in loans.
“But, I need to be honest with you and remind you, if the PSP extension fails, as we have warned for months, we’ll be forced to find a way to further reduce our spending, reduce our salaries, wages and benefits specifically by seeking concessions, or as a last resort, layoffs and furloughs,” Kelly said in the video message to employees posted Thursday afternoon.
A similar program passed in
The announcement comes as tens of thousands of airline employees face the possibility of furloughs if Congress is unable to reach a deal to extend a separate grant program that gave airlines billions of dollars if they agreed to keep workers on the job through the end of September. While negotiations continue, a deal must be reached before midnight Wednesday.
“The payroll support and loan programs created by the CARES Act have saved a large number of aviation industry jobs, and kept workers employed and connected to their health care, during an unprecedented time,” Treasury Secretary Steven Mnuchin said in a statement. “We are pleased to conclude loans that will support this critical industry while ensuring appropriate taxpayer compensation.”
Mnuchin also said Congress must extend the payroll support program, “so we can continue to support aviation industry workers as our economy reopens and we continue on the path to recovery.”
If nothing soon changes, October will be a brutal month for airline employees. The airline industry was hit hard by the effects of Covid-19. The federal government warned people not to take unnecessary flights and prohibited travel to and from certain countries. Passengers were afraid to fly and canceled their trips and vacations over concerns that they’d catch the disease. Business professionals that were accustomed to taking flights to meet with clients played it safe by holding Zoom calls instead.
As flight travel came to a grinding halt, the revenues and profits for the major airlines plummeted. There was little other choice for the airlines than reducing headcount, as there wasn’t a demand for flying. Two major companies in the industry, American Airlines and Delta Air Lines, told their respective employees that there will be massive layoffs in October. Concerns and fear over