Southwest Airlines chief executive Gary Kelly has warned employees that passenger numbers will need to triple by the end of 2020 if the Texas-based carrier is to avoid the first-ever involuntary furloughs in the company’s history. Kelly made the dire assessment in an internal memo sent to staffers on Monday as Southwest attempts to convince employees to voluntarily leave the airline.
“The recent rise in Covid cases and increases in regional restrictions on businesses and states requiring quarantine aren’t positive developments for our business,” Kelly warned in the memo. “We’re very concerned about the impact on already weak travel demand,” he continued.
“Although furloughs and layoffs remain our very last resort, we can’t rule them out as a possibility in this really bad environment,” Kelly explained. “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.”
Southwest has received $3.2 billion in payroll support under the CARES Act and is therefore banned from carrying out any involuntary furloughs or layoffs until October 1. The airline can, however, encourage employees to take early retirement or significant periods of unpaid leave.
Increasing uptake in these voluntary programs is seen as crucial to prevent a tsunami of job losses come the end of September. American Airlines claims it faces an overage of 16,000 staff, including between 7,000 and 8,000 flight attendants but the most alarming prediction has been made by United Airlines which estimates an overage of as many as 36,000 employees.
The Association of Flight Attendants (AFA-CWA) has described United’s prediction as an “an enormous overreach,” which will likely be “overwhelming” for many flight attendants at the carrier.
“In comparison to our domestic competitors, what United has identified is out of proportion with the industry and with our current economic situation,” the union said of the situation.
Unlike United and American, though, Southwest will benefit from initial increases in domestic passenger numbers. International flight schedules will likely take much longer to reach anything like pre-COVID levels, especially with a resurgence in Coronavirus cases across a number of U.S. States keeping border restrictions in force.
On Sunday, passenger numbers passing through TSA checkpoints reached nearly 30 per cent of last year’s figures. Analysts, however, fear the new surge in COVID-19 cases in States like California, Florida and Texas could hit new bookings just as confidence was beginning to return.
