Global Economics

Southwest Delaying Employee Layoffs and Furloughs

Earlier this month, it was reported that Southwest (LUV) would be laying off and furloughing a large chunk of its employees on October 1st due to the expiration of a date requirement in place through the acceptance of a $25 billion federal aid package. However, on Sunday, Fox News reported that the airline company’s CEO has no plans to layoff or furlough workers.

In a letter sent to employees of Southwest, CEO Gary Kelly stated, “I want you all to know we will not furlough or layoff any Southwest employees on October 1, unlike our major competitors. Further, we have no intentions of seeking furloughs, layoffs, pay rate cuts, or benefits cuts through at least the end of this year.” While the letter explained that layoffs and furloughs aren’t guaranteed to never happen within the company, Kelly continued to further encourage employees by thanking them for their hard work and the value they bring to the company.

Losses are currently at an all-time high for the airline industry due to the ongoing coronavirus pandemic. During Southwest’s Q2 earnings report last week, it was reported that there was a net loss of $915 million. Operating revenues were also reported down by 82.9% year-over-year.

Other large airlines are in similar positions reflecting loss. Earlier in July, Delta Airlines (DAL) reported over $5 billion in losses, and United Airlines (UAL) reported “the most difficult financial quarter in its 94-year history” with a Q2 net loss of $1.6 billion. American Airlines (AAL) also reported a net loss of $2.1 billion for their Q2 earnings. Some experts have said that the airline industry may be looking at total sales this year of only $1.3 billion.

At the time of this article’s writing, Southwest stock was down .91% to $31.3713.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Trader Buzz). I have no business relationship with any company whose stock is mentioned in this article.


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