Southwest Airlines is asking its unions to agree to reduce salaries to avoid retrenchments at least through next year as airlines continue to be battered by the coronavirus.
The Texas-based carrier hasn't temporarily laid off or terminated workers but has said that without an immediate return to normal aviation demand - or an extension of federal funding - Southwest might be forced to let staff go. Commercial travel demand has fallen almost 70% from the previous year and has remained stagnant since June.
Southwest Airlines chairperson and chief executive Gary Kelly said unless the government provided more financial help to U.S. carriers, the airline would have to trim spending to avoid shedding billions of dollars every quarter. Union officials said Southwest should seek other options.
Kelly said executives would take a 10% salary cut next year and that noncontract staff might be subjected to the same. Kelly promised not to place workers on temporary leave this year but said Southwest "simply can't afford to continue with the terms required to keep full pay and employment," CNN quoted him as saying.
Kelly said his base pay had been cut to zero until the end of next year and a 20% cut in pay for senior executives will continue through 2021. Southwest said salary reductions would be reversed if the federal government approved a financial boost, CNN reported.
United and American Airlines started to put 32,000 employees on temporary leave last week - as did smaller airlines. Delta Air has avoided these temporary layoffs after staff agreed to take voluntary buyouts. It still estimates it will have to lay off 1,900 pilots from Nov. 1.
Southwest, the fourth largest U.S. carrier in terms of sales, recently said it was losing approximately $17 million a day. It shed $915 million in the second quarter and borrowed billions while trimming flights to save money.
