Southwest (LUV) Warns More Than 6,000 Employees of Job Cuts

Per a CNN Report, Southwest Airlines LUV has warned of involuntary furloughs for the first time in its history.

In light of the company’s cost-cutting negotiations with its unions not progressing in the desired direction, management raised an alarm stating that jobs of nearly 7,000 employees (roughly 12% of its work force) will be in jeopardy.

Of the employees who could lose their jobs, more than 1,200 will be pilots, 1,500 flight attendants, 1,110 customer service staff and 2,500 ramp, cargo and other support employees. Notably, the airline sent out notices to these employees who are at risk of losing jobs. The layoff might start Mar 15, 2021 onward. Notably, Jon Weaks, president of the Southwest Airlines Pilots Association, described this action of intimating employees with notices as a “sad milestone” in the carrier’s history.

However, Southwest Airlines, currently carrying a Zacks Rank #3 (Hold), may not have to take this drastic step, if any one of the following two scenarios materialize. Either the employees accept the pay cuts or there is a second round of federal stimulus.

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Notably, Southwest Airlines is not the only U.S.-based carrier to face this problem of overstaffing as air-travel demand continues to be suppressed in the current coronavirus-scarred scenario. Notably, the expiry of the CARES Act on Sep 30 already forced carriers like American Airlines AAL and United Airlines UAL to shrink their respective workforces amid dwindling air-travel demand.

Moreover, pilots at Delta Air Lines DAL recently voted in favor of accepting reduced pays in a bid to save their jobs until 2022.

As negotiations with unions reached a deadlock, Southwest Airlines management will now expect a similar response from its employees so that this caution of job cuts does not have to be implemented.

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