How Southwest Plans to Shrink by 25 Percent But Not Lay Off Workers
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By any measure, the second quarter has been historically awful for the U.S. airline industry, and Southwest was no exception. Green shoots at the start of the quarter have been crushed as Covid-19 continues to rampage across the U.S.
It's been a point of pride for Southwest Airlines that it has never laid off or involuntarily furloughed a single employee in its 50-year history. Through crisis after crisis, as its competitors slashed headcount, negotiated difficult concessionary contracts with unions, and filed for bankruptcy, Southwest has kept is workforce intact.
The Covid-19 pandemic and its resulting decimation of the airline industry won't change that, CEO Gary Kelly said on the company's second-quarter earnings call. But that could change.
Southwest, like all U.S. airlines that took payroll support funds through the federal government's CARES Act stimulus, is obligated not to furlough or lay off employees through Sept. 30. And while its competitors, notably American Airlines and United Airlines, have warned that furloughs and layoffs are likely on Oct. 1, Kelly said Southwest does not anticipate having to do so this year, although it has drawn up plans in case demand for travel should fall further.
Instead, Kelly said almost 17,000 employees — or 27 percent of the company's workforce — have availed themselves of voluntary separation and long-term leave options the company provided. Of these, 4,400 employees decided to leave the company, and 12,500 opted to take leaves-of-absence of a year or longer.
Using employees as a rough guide to the size of the airline's network, Kelly said with one-quarter of the airline's employees gone by the en
