On Monday (October 5), Gary C. Kelly, chairman of the board and chief executive officer of Southwest Airlines, told employees in a video message that the airline continued to burn cash every day and without further support from the federal government the company needs to take more drastic action to ensure its survival. In order to avoid redundancies or involuntary pay reductions in 2020, Kelly has asked all staff to agree to a pay cut. He confirmed that his salary remains at zero through to the end of 2021, and that from January 1, 2021, all leadership groups’ base salaries will be reduced by 10% for the full year, with a similar approach for all other noncontract employees.
For union employees, Southwest is now approaching union representatives for salary concessions – and Kelly has appealed for a swift resolution on this matter to have cost savings in place by the start of the new year. “If we are so fortunate to have the federal government act and extend the PSP through next March as proposed, then all these pay-cut efforts will be discontinued or reversed. To repeat, if the PSP is extended, we will discontinue these pay-cut efforts,” said Kelly.
“It pains me that through no fault of any of you, we have to take these next steps,” he adds. “But we need to realise how much we’ve demanded of our suppliers, how much we’ve asked of our lenders, our investors, our communities, our government. We must demand no less of ourselves.”