Southwest CEO Says Pay Cuts Needed if Aid Doesn’t Come Through

Southwest Airlines plans to cut pay for non-union workers to start 2021 and is asking union workers for concessions as well if the much-promised second round of government aid doesn’t come through.

Southwest CEO Gary Kelly outlined his plan for next year in a 10-minute video message to employees.

Congress is in the midst of heated debate regarding an extension of the CARES Act that provided airlines $28 billion in grants and loans back in March. The industry says a second wave of aid is needed to help offset a 70 percent loss in passenger travel due to the coronavirus pandemic.

Non-union employees are facing a 10 percent pay reduction; Southwest is seeking a similar amount from union workers, although the carrier faces a much bigger fight there with union chiefs.

“We would have to wipe out a large swath of salaries, wages and benefits to match the low traffic levels to have any hope of just breaking even,” Kelly said in the video.

Speaker of the House of Representatives Nancy Pelosi (D-Calif.) has said that aid to the airlines is imminent, but both sides of the aisle have been stalled on an overall stimulus package.

Without the aid, the only thing preventing furloughs and layoffs at Southwest would be the pay cuts Kelly proposed in the video.

According to the Associated Press, Southwest, the fourth-biggest U.S. airline by revenue, recently said it is burning about $17 million a day. It lost $915 million in the second quarter and borrowed billions while cutting back on flights to conserve cash.

Southwest Flight Attendants Union President Lyn Montgomery said Kelly’s remarks should galvanize union members to push lawmakers for more federal relief “before we go down the road of cracking open our contracts and taking out pay and quality-of-life benefits that took us decades to earn.”