Southwest Airlines CEO Gary Kelly said in a message to employees Monday that the carrier intends to avoid furloughs throughout 2021.
Kelly said Southwest will implement pay cuts of at least 10% on all nonunion employees beginning Jan. 1 and will aggressively pursue contract concessions for 2021 from its unions in its efforts to keep all employees working through the year.
He said that the airline will keep its promise not to implement involuntary pay reductions or layoffs this year, except on senior executives, who have already taken 20% salary cuts. But Kelly also said he doesn't expect air traffic to return to previous levels until late next year at best. At present cost levels, quarterly losses would be in the billions of dollars until then.
As a result, the 10% pay cuts will be implemented at the start of new year on nonunion staff, including the remainder of Southwest's leadership team. Kelly also said that effectively immediately, he will forfeit his base salary through next year.
He called on union leadership to negotiate in earnest and to be ready to make concessions in time for all cost savings to be in place by Jan. 1. If not, furloughs will have to be a last resort.
"We simply don't have time for long, drawn-out, complex negotiations," Kelly said.
He went on to explain the furloughs would interfere with Southwest's strategy to drive new traffic and win new customers, even during the pandemic.
"We're adding new cities in that vein; we're playing offense. And that's very exciting," Kelly said. "If we furlough, we'll have to cut deep to realize adequate savings. And cutting our capacity deeply works against our goal of driving more traffic. We need the cost savings and the peopleit's as simple as that."