Southwest Warns Workers of First Layoffs in Company History

(Bloomberg) -- Southwest Airlines Co. issued notices for what could be the first involuntary furloughs in its 49-year history, saying a union declined to discuss concessions aimed at cutting payroll costs.

Forty-two workers who manage parts inventory and are represented by the Teamsters union received federally required notices that they could be laid off as of Jan. 11, the Dallas-based airline said Friday. The full work group, which Southwest said voted not to engage in talks, includes 322 employees. The carrier remains in negotiations with other unions.

The action could foreshadow additional furloughs if Southwest doesn’t secure givebacks with groups such as pilots, mechanics and flight attendants. The airline has asked employees for a one-year, 10% reduction in labor expense after other cost cuts failed to stem millions of dollars in daily losses caused when the coronavirus pandemic eviscerated travel demand.

“We are not closing the door to further discussions,” said Russell McCrady, Southwest’s vice president of labor relations. “We hope to continue seeing progress that will protect our employees, while simultaneously responding to one of the greatest challenges ever faced by our airline.” Furloughed employees would be expected eventually to return to work.

While the workers, known as material specialists, declined to negotiate contract concessions, the union told Southwest it was willing to discuss other measures that would produce the cost savings, the Teamsters said in a letter to members. The employees “have already sacrificed much” through members who left the company voluntarily or took extended leave, the union said.

“The 42 jobs the company is threatening appears to be SWA using our small group to send a signal to other labor groups about the company’s potential intentions for furloughs,” said the letter from David Bourne, director of the Teamsters Airline Division. He reminded workers that such notices can be rescinded at any time for any reason, and that the union remains open to negotiations.

Southwest and its unions began talks in early October aimed at reaching agreements by month’s end toward the airline’s goal of saving more than a half-billion dollars. Concessions sought by the airline would protect workers from furlough through 2021. The carrier reached deals with two small work groups and has extended talks with others for a short period.

An extension of federal payroll support for airlines would avoid Southwest’s need for concessions. Congress and the White House failed to agree before the election on a broad House of Representatives relief proposal that would include another $25 billion of payroll support beyond what carriers have already received.

U.S. airlines have furloughed about 38,000 workers since Oct. 1, including large swaths at American Airlines Group Inc. and United Airlines Holdings Inc. Those cuts followed the departure of 150,000 people through leaves, buyouts or early retirements. About 17,000 employees have left Southwest temporarily or permanently through voluntary programs.

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