CEO of Southwest Airlines said that they have no plans of reducing workforce for at least this year
For the moment, Southwest Airlines has no plans of reducing their workforce even amid the pandemic’s impacts on the air travel industry. But it is still no assurance as the health crisis persists.
No Job Loss for Now
According to Gary Kelly, CEO of Southwest Airlines, there are currently no plans to furlough employees. Writing on a memo which CNN managed to obtain, Kelly told: “We have no intention of seeking furloughs, layoffs, pay rate cuts, or benefits cuts through at least the end of this year.”
However, he also said that there is no guarantee of not coming across with such decision, as the coronavirus outbreaks still wounds major aviation brands. Low demand for air travel come as governments impose restrictions to curb the spread of the virus. Though number of flights rose when restrictions eased, it is starting to dwindle again as more people are reported to contract COvID-19.
Previously, two other US airlines, United Airlines and American Airlines are contemplating on the possibility of letting go tens of thousands of employees amid the blow of the pandemic to many business sectors, air travel included.
Efforts to Cure Cash Bleeding
The CEO of Southwest Airlines revealed they are losing $20 million per day. He also relayed in the memo how the company is dealing with this cash burn. Writing, Kelly said: “To deal with the financial crisis, we scrambled to cut spending and raise more cash from multiple sources.”
Among the efforts of the company to further minimize bleeding of cash is by reducing costs for capital projects, returns for shareholders, and the company’s operations. This allowed them to save $7 billion for this year. They also borrowed over $12 billion from lenders, and sold to investors their common stock.
Furthermore, when Warren Buffet has sold Berkshire Hathaway’s stake in major American airlines, including Southwest Airlines, the business tycoon assumed it would take years for the air carrier businesses to recover. Kelly in a CNN interview mentioned, “I don’t think anybody knows, and certainly that’s not an unreasonable view to take.” The Southwest Airlines CEO further noted that Buffet’s move is pessimistic, while Kelly is “far more optimistic.”
Efforts to Curb the Virus
Southwest Airlines is among the airline companies to extend until October the policy of not allowing occupation of middle seats. This in turn will limit the capacity of their planes. Last week, they told: “As part of our Promise (Southwest Promise, the company’s name for their efforts of curbing spread of coronavirus), we are limiting seats sold on each flight through at least October 2020 to allow middle seats to remain open to allow for physical distancing onboard our aircraft.”