With the coronavirus pandemic continuing to rage across the country, more than 100 Southwest Airlines employees in Maryland could be furloughed starting this January as the company braces for the impact of a dismal winter.
The airline, part of a travel industry devastated by the public health crisis, filed a pair of Worker Adjustment and Retraining Notifications with the Maryland Department of Labor this week for a total of 106 positions related to its operation at the BWI Thurgood Marshall Airport.
They’re among roughly 400 mechanics and other employees who could be furloughed as the Dallas-based carrier tries to negotiate cost cuts with union groups. They would be the first layoffs in the company’s 50-year history as it faces “multibillion-dollar losses” next year.
The layoffs could take effect Jan. 25 if the virus maintains its current course, Southwest CEO Gary C. Kelly said during a virtual forum Friday with the Greater Baltimore Committee. He said the company will benefit from some holiday travel over the next few weeks, but expects air travel to slow dramatically in the first half of 2021.
“If we all take a little haircut for a year, we can preserve every single job,” Kelly said. “It’s temporary, and hopefully we’re in a position where we’re breaking even again next year.”
Kelly, who is currently not collecting a salary, said the company remains 20% overstaffed even after offering voluntary separation packages and extended leave programs to about 16,000 workers. Southwest also has instituted pay cuts for some non-union employees.
The workers issued furlough warnings are represented by the Aircraft Mechanics Fraternal Association and include mechanics, appearance technicians and facilities maintenance technicians.
“This action is being taken in retaliation for Southwest’s perceived lack of progress in cost savings discussions with the union,” the union said in a statement. “Southwest suggested the furloughs could be avoided if we agree to cost savings measures (voluntary wage concessions), if additional government aid is extended to the airline or if there is an unforeseen revenue increase.”
While some sectors of the economy — such as the housing market and consumer goods — have experienced pandemic-related growth, service, travel and hospitality businesses have been hammered as more people stay home and limit interactions with others.
“Every dollar we spend right now is borrowed, and we need to come out of this not just [having] survived, but also healthy,” said Kelly, adding that the company has racked up about $8 billion or $9 billion dollars in debt. “No airline has a profitable flight right now.”
Kelly said he hopes for a steady recovery after the pandemic comes to a conclusion, but the severity and unpredictability of the virus, as well as changes to business travel and leisure spending, have made the company’s future harder to predict, he said.
Southwest rebounded slightly in May and June after some governors lifted stay-at-home orders, Kelly said. But the progress ground to a halt in July and September as cases picked back up in certain parts of the country.
In response, the company has cut some costs and scaled back on flights. It also instituted new cleaning, boarding and disembarking protocols to enhance customer confidence in flying.
Southwest and other airlines received federal grants and loans as part of the spring’s federal coronavirus relief bill, but much of it will have to be repaid. Kelly said he disagrees with the premise that the airline received a government “bailout” because it implies the damage was self-inflicted in nature.
“No company can be prepared for a pandemic; only a sovereign nation can,” he said.
If another stimulus package made its way out of Washington, Southwest might be able to avoid the furloughs, he added.
The airline, the largest carrier at Baltimore-Washington International, had initially predicted 2020 would be its best year on record. The collapse of tourism, hospitality and routine travel stunned Kelly and other executives as they went from comfortable levels of profitability to penny pinching in less than a year’s time.
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Southwest, like other airlines, has been dogged by public health pleas for social distancing, which makes air travel less feasible. The company has responded by leaving every middle seat empty for several months, a policy it will reverse next month.
Kelly said that decision stemmed from internal studies that point to empty seats as an unnecessary step given other protocols meant to stave off transmission. Southwest airliners already have high-efficiency filtration in place designed specifically to prevent the spread of diseases, and the airline limits the number of people who can board and disembark at a time. Now, everyone on board must wear a mask.
Thanksgiving week usually draws tens of thousands of travelers to BWI Airport, but this year, almost 90% of Marylanders are planning to stay home for Thanksgiving, according to a new survey released Thursday by AAA.
The U.S. Centers for Disease Control and Prevention urged people Thursday not to travel this year as the United States shatters record after record for daily case counts, deaths and hospitalizations related to COVID-19. Maryland Gov. Larry Hogan, a Republican, also urged state residents to stay home, as family gatherings, especially those indoors, have been linked to high rates of transmissions by state contact tracers.