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Southwest sounds alarm on jobs in ‘very bad environment,’ American preparing furlough warnings

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imageStock Markets49 minutes ago (Jul 13, 2020 04:55PM ET)

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(C) Reuters. FILE PHOTO: A number of grounded Southwest Airlines Boeing 737 MAX 8 aircraft are shown parked at Victorville Airport in Victorville, California

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By Tracy Rucinski and David Shepardson

CHICAGO/WASHINGTON (Reuters) – Southwest Airlines (NYSE:LUV) Chief Executive Gary Kelly told employees on Monday that he was concerned about the impact of a recent rise in COVID-19 cases and quarantines on already-weak travel demand and said passenger numbers would need to triple by the end of the year to prevent job cuts.

“Although furloughs and layoffs remain our very last resort, we can’t rule them out as a possibility obviously in this very bad environment,” Kelly said in a message to employees reviewed by Reuters. He added that a spike in cases and travel restrictions “aren’t positive developments for our business, and we are concerned about the impact on already weak travel demand.”

United Airlines started sending furlough warnings to about 45% of its frontline workers last week, and American Airlines (NASDAQ:AAL) was preparing to send warnings – coupled with early exit packages to encourage voluntary departures – this week, people familiar with the matter said.

Southwest and United employees have until July 15 to apply for early exits. No U.S. airline can furlough staff before Oct. 1, according to terms of a government bailout, and must give employees 60 days’ notice of potential furloughs.

Not everyone who receives a notification will be let go, United said.

Airlines are grappling with overstaffing and burning millions of dollars of cash each day, even as they face pressure to limit passengers on flights to allow for social distancing.

JetBlue Airways (NASDAQ:JBLU) Corp said Monday it will extend blocking middle seats on larger airplanes and aisle seats on smaller aircraft for flights through Sept. 8. American and United are again booking flights to capacity, but informing customers if their flights will be full.

Delta Air Lines (NYSE:DAL), which reports second-quarter results on Tuesday and is blocking middle seats through at least Sept. 30, told employees last week it plans to get “smaller as we look ahead to the recovery, which is likely to be lengthy and slow.”

Monday is the deadline for Delta employees to accept a voluntary exit deal.

Southwest sounds alarm on jobs in ‘very bad environment,’ American preparing furlough warnings

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