Unless it triples its current bookings, Southwest Airlines CEO Gary Kelly told employees to prepare for staff cuts.
In a note to workers – who already face a July 15 deadline to decide whether to accept a voluntary buyout to leave the airline – Kelly said jobs are at risk.
“Although furloughs and layoffs remain our very last resort, we can’t rule them out as a possibility obviously in this very bad environment,” Kelly said in a message. “We need a significant recovery by the end of this year — and that’s roughly triple the number of passengers from where we are today.”
Airlines lost nearly 94 percent of business compared to last year in March and April of 2020 due to the coronavirus pandemic. Most, including Southwest, took grants and loans from the federal government as part of the CARES Act stimulus program, with one proviso being that airlines could not furlough or terminate employees for six months. That stipulation runs out on Oct. 1.
Though airlines are slowly getting their footing – but still off 70-75 percent in demand compared to 2019 – Kelly said that the “recent rise in COVID cases and increasing regional restrictions on businesses and states requiring quarantine aren’t positive developments for our business, and we are concerned about the impact on already weak travel demand.”
Virtually every airline is planning on staff reduction when they are allowed, saying it is likely inevitable. Whether the situation changes in the next 10 weeks and there is a sudden surge in bookings remains to be seen.
But at least one airline, Delta, could possibly avoid mass furloughs since a greater-than-expected amount of employees are taking the incentivized buyout plan the carrier is offering.
