July 26, 2020 12:38 PM
Posted: July 26, 2020 12:38 PM
Southwest Airways says it won’t furlough any staff for now, regardless of COVID-19’s crushing blow to main airways.Credit score: Southwest Airways
(CNN) — Southwest Airways says it won’t furlough any staff for now, regardless of COVID-19’s crushing blow to main airways.
“We have no intention of seeking furloughs, layoffs, pay rate cuts, or benefits cuts through at least the end of this year,” Southwest CEO Gary Kelly mentioned in a memo obtained by CNN. However Kelly cautioned that he “can’t guarantee it will never happen, especially during these dark pandemic times.”
Restrictions hooked up to federal bailout cash barred airways from implementing furloughs or layoffs by September. Earlier this month, each United Airways and American Airways despatched warnings of doable furloughs to roughly 60,000 staff.
Southwest says 17,000 of its employees have already taken voluntary separation packages and prolonged time without work. Even nonetheless, Kelly mentioned the airline is dropping $20 million a day.
Kelly outlined the airline’s efforts to chop prices within the memo. “To deal with the financial crisis, we scrambled to cut spending and raise more cash from multiple sources,” he mentioned, specifying that the corporate lower capital tasks, shareholder returns and working prices accounting to $7 billion for 2020. The airline additionally secured $3.2 billion in cash proceeds underneath the CARES act, offered frequent stock to traders for $2.2 billion in cash and borrowed $12.2 billion from lenders.
Airways have skilled a tumultuous couple of months. Journey and bookings took a tough hit early within the pandemic and bounced again at the start of July, solely to see one other downturn not too long ago as instances spiked once more.
In May, Warren Buffett disclosed that Berkshire Hathaway offered its complete stake in Southwest and three different main US airways as a result of he believed it could take years for air journey to get better. Kelly commented on the transfer in an interview with CNN’s Poppy Harlow, saying, “I don’t think anybody knows, and certainly that’s not an unreasonable view to take.” He added, “It’s a pessimistic one. I am far more optimistic.”
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