Southwest Warns Of Layoffs Unless Passenger Traffic Triples

Southwest Airlines on Monday warned employees it may resort to layoffs or furloughs unless passenger traffic triples, as the company reels from the damage caused by COVID-19.

Like other US carriers, Southwest has been hit hard by the pandemic's travel disruptions, and last week the US Treasury announced the airline had taken a government loan, through the $2.2 trillion CARES Act, in addition to $3.2 billion in emergency assistance it received earlier in the year.

But in a letter to employees on Monday, Southwest CEO Gary Kelly warned the airline may be forced to cut staff if people refuse to fly.

"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.

"We need a significant recovery by the end of this year -- and that's roughly triple the number of passengers from where we are today."

Under the terms of the CARES Act, airlines receiving the loans must keep workers on the payroll through the end of September.

Southwest, like other airlines, is offering its incentives to workers to voluntarily leave the company. The Dallas-based carrier said it employed 60,000 people in 2019.

Kelly said "we are still overstaffed, and COVID cases continue to rise. And, as you know, that directly impacts our business."

US states have begun lifting lockdowns imposed in mid-March to stop the spread of the coronavirus, but a surge in cases to record-high levels and rising death counts have stymied efforts to revive the economy and resume business as before.

United Airlines last week said it could lay off as many as 36,000 workers on October 1, nearly 38 percent of its workforce, as it tries to cut costs.