Southwest Airlines chief executive officer Gary Kelly told staff in a letter Sunday that they can keep working as the airline would not initiate any retrenchments or furlough workers in October as rival carriers have announced, CNN first reported.
According to Kelly, Southwest Airlines has no plans to "seek furloughs, pay rate cuts or benefit cuts through at least the end of this year," Connor Perrett of Business Insider quoted Kelly - who added they've "never had any of these in our 49-year history -- as saying in the letter.
Voluntary severance packages and an extension of leave from Southwest have been offered to, and accepted by almost 17,000 of the airlines' staff, based on Kelly's note.
The announcement was made as two of Southwest's rivals -- United and American Airlines -- both warned earlier this month that their personnel could be laid off on Oct. 1 as the $25 billion airline industry bailout that formed part of the $2.2 trillion stimulus program approved in March expires.
United Airlines posted a $1.6 billion loss on Tuesday and stated that over 6,000 staff have voluntarily agreed on a separation pay. The letter also said that Southwest has shed nearly $1.6 billion as well, year-to-date, as a result of an ongoing global health crisis, 95 percent of which took place in the second quarter this year.
Trends in air travel have been very dreary in the second quarter. The first three months of 2020 was a narrative of two halves for the U.S. airline market, with demand robust in January and February, but dropped abruptly the following month. April was particularly depressing, and Transportation Security Administration checkpoint figures show that passenger volume through its airport fell over 90 percent for the month.
Kelly told workers that the airline was burning through $20 million more every day. To recoup, he wrote that Southwest Airlines had slashed some ongoing projects, worked with federal officials to raise around $3.2 billion in stimulus funds via CARES Act, unloaded $2.2 billion worth of company shares, and loaned over $12 million from lenders through sales of commercial planes as well as leasebacks.
The airline has $14 billion in savings, which will fund its losses for over two years and another $1 billion in easily accessible credit. However, Southwest has over $11 billion in debt on top of its $20 million daily losses.
Kelly bluntly said that Southwest is in "intensive care," and that this "unprecedented amount of fresh cash is crucial to fund these losses," Lucas Manfredi of FOX Business quoted him as saying in his report. "Without it... we literally, shut down."
