More than a quarter of all Southwest Airlines employees volunteered to take buyouts and extended leaves of absence as the Dallas-based carrier tries to avoid furloughs due to the COVID-19 crisis.
In a Monday audio message to employees, Southwest CEO Gary Kelly said 16,895 employees took one of the two options. That represents about 28% of the Dallas-based airline’s employees.
“I’m incredibly grateful to those of you who answered the call,” Kelly said. “I know there are stories behind every one of those 16,895 decisions — from your incredible history at Southwest Airlines, to stories of what’s ahead in your next phase. And I personally know a lot of those stories, and it is a bittersweet moment for us, for sure.”
Some 4,400 employees opted to take voluntary separation packages and another 12,500 signed up for the extended leave, which amounts to six, 12 or 18 months away from work, Kelly said.
Southwest has about 60,000 employees in the U.S. and a handful in foreign countries where it flies.
The buyouts news comes as air traffic in the U.S. begins to stall with a surge in coronavirus cases. After about 30,000 fewer passengers a day are boarding airplanes at airports than they did a week ago, according to numbers from TSA.
Southwest will likely accept all the buyouts, Kelly said. The company still has to decide which employees will get extended leave, but it will likely be almost all of them.
Southwest and other air carriers have been desperately trying to reduce workforce numbers for the dismally low number of passengers flying. Passenger traffic is still 70% lower than it was last year, according to the Transportation Security Administration, and the industry isn’t expected to recover sufficiently by Oct. 1 when stimulus grant money for airlines runs out.
Fort Worth-based American Airlines last week issued 28,000 furlough notices to unionized mainline and regional employees, following 36,000 notices sent out by Chicago-based United the week before. American already trimmed its corporate and support staff by about 5,000.
Kelly and other airline executives said they expect flying to be down about 30% in the fall and that staffing will have to be reduced by a similar percentage to put the industry on better footing.
Southwest has taken $2.1 billion in stimulus grants and another $1 billion in loans, which included stipulations that airlines can’t lay off or furlough employees, or cut pay and benefits through the end of September.
But when that $2 trillion package was signed at the end of March, few anticipated that much of the world’s economy would still be stymied in late July. Southwest has also been approved for billions more in loans, but Kelly said it isn’t clear if the airline will take those loans.
The deadline for employees to accept the buyout and leave packages was July 15, although other airlines have extended deadlines.
According to documents shared with employees, 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 the voluntary separation. 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.
Southwest is among the airlines that have made major changes to the way they operate, including more frequent cleaning, hundreds of parked planes and reducing capacity on planes so that no one has to sit in middle seats.
However, analysts have pointed out that it’s very difficult for airlines to be profitable flying planes at reduced capacity. Kelly said the airline is still burning through millions of dollars of cash a day.
Southwest is also still restricted in where it flies. Hawaii still has quarantine orders for anyone that travels there, along with Mexico. The Bahamas announced this weekend that it was closing its borders to commercial flights from the U.S.
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