Travel around the world is at a virtual standstill. Airlines are fighting to survive with no revenue stream. What the world will look like once social distancing measures and boarders reopen is still unknown. Even when the world will return to normal is anyone’s guess. Currently, Southwest Airlines is the world’s largest airline based on their flight schedule. Southwest is receiving stimulus money through the CARES Act. This will ensure their 60,000 employees are not furloughed or layoff through September 30, 2020. Yet, the question remains, what will happen in October?
Gary Kelly, Southwest CEO is making the bold statement and claiming that Southwest will not be downsizing. Meanwhile, United is warning employees that they will lose their jobs come October. Through his weekly videos, Gary says that Southwest will be taking a very different approach. Southwest is preparing for a slow travel period for some time, even beyond this year. It may take four to five years for travel to rebound. Yet, downsizing is not their plan nor are furlough.
Kelly did admit resistance to downsizing will require a somewhat quick return to normal. Airline travel will need to bounce back. Gary says, “We don’t want to furlough employees. We don’t want to ground airplanes. We don’t want to close cities.”
Throughout’s Southwest’s 49 year history they have never laid employees off. Southwest made it through 9/11 better off than most airlines. Can Southwest make it through these unprecedented times? That is yet to be known. Southwest is in talk with their Union about concessions come October, if flying doesn’t return to normal. Concessions could include pay cuts, early retirements, and furloughs.
Although Gary Kelly is trying to promise no furloughs or pay cuts, no CEO can really promise this. Gary is trying to reassure scared employees that Southwest will still be flying in the future. The balance sheet is currently strong. However, no company can survive without revenue. Southwest will need to shift their strategy depending on what happens over the next several months. Yet for now, downsizing and furlough are not their plan.