Southwest Air to Avoid First Layoffs as Relief Package Clears

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Southwest Airlines Inc. said it would rescind plans to cut jobs and wages next year, now that new federal payroll support is coming through, averting what would have been the first worker layoffs in the carrier’s history.

U.S. airlines will receive $15 billion to pay workers as part of the package President Donald Trump signed into law Sunday. The measure funds employee wages through March 31. Southwest could receive $2 billion from the law, Bloomberg Intelligence estimated last week.

The pandemic forced Southwest to take “actions that we’ve never even considered before in order to save our Company,” Chief Executive Officer Gary Kelly wrote in a memo to employees late Sunday. “Thankfully, as a result of this crucial aid, we can breathe a sigh of relief, knowing that we will not be forced to follow through with those steps.”

The company had been seeking $500 million in labor cost savings, with the first of nearly 7,300 job cuts expected in January. Additional rounds were possible in March and April. The new federal aid will preclude job cuts for all of 2021, Kelly said.

Dallas-based Southwest remains overstaffed in “many areas,” he wrote, encouraging employees to use voluntary time-off programs when those are available.

Southwest rose 1% to $46.74 at 10:06 a.m. Monday in New York. The stock had dropped 14% this year through Dec. 24, the smallest decline on an S&P 500 index of U.S. airlines.

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