The Southwest Airlines union for the company's pilots refuses the proposed 10% salary cut to avoid furloughs through the end of 2021.
The Southwest Airlines Pilots Association pushed back on the across-the-board reduction and force majeure clauses.
“This addition would not protect us from furloughs or ensure us that our hourly trip rates would snap back after the term of any agreement,” the labor union said in its memo to members.
The Southwest Airlines union cited other options like voluntary time off at lower pay and early retirement programs.
“We have a revenue and short-term cash problem that cannot be fixed by concessions alone,” the union said in a memo on Friday.
In his interview with CNBC, Jon Weaks, president of the Southwest Airlines union, described the company’s proposal as “dead on arrival” but that the union welcomes further discussions on cost-cutting measures.
United Airlines pilots agreed to lessen minimum hours in order to stop around 3,000 furloughs planned this year.
"A shared sacrifice"
Southwest Airlines previously called on labor unions to accept pay cuts. “It’s a shared sacrifice and this is the kind of company that I think is up for that task,” Southwest CEO Gary Kelly said during an interview on CNBC’s “Squawk Box.” Kelly mentioned he is letting go of his base salary until the end of next year.
US airlines have decided to not cut any jobs until Oct. 1 under the terms of $25 billion in federal funds. Southwest Airlines said no to airline layoffs or reducing worker pay through the end of 2020, and this has become possible due to thousands of employees who took buyouts or had voluntary time off.
Faced with a slow recovery, Southwest, its US rivals and labor unions are calling on Congress and the White House to provide $25 billion in additional federal assistance to keep payrolls, generally carriers’ biggest expense.
“Obviously, any reasonable person realizes this is a huge crisis not just for the airlines but for the country,” Kelly told CNBC.
Kelly said on Monday that he wants to present cost-saving agreements with unions by Jan. 1, and furloughs will be a “last resort” if they do not come up with deals.
Airline support
The pay cuts at Southwest Airlines would be reversed if Congress releases additional airline payroll support, Kelly said.
“TWU Local 556, the union of Southwest Airlines flight attendants, has made it clear to the company in previous conversations that our members are not interested in making concessions to a contract that took decades to obtain,” said Lyn Montgomery, the union’s president, in a statement.
In August, President Donald Trump expressed his support for the release of another $25 billion in federal aid for the airline industry.
There is bipartisan support for issuing additional funds for one of the worst-hit sectors during the pandemic. US airlines previously said that the jobs of over 70,000 of their workers would be at risk when the current round of aid ends in the fall.
“I think it’s very important that we keep the airlines going,” Trump said in a White House press briefing when asked about the extension of the aid. “We don’t want to lose our airlines. If they’re looking at that, whether they’re Republican or Democrat, I’d be certainly in favor. We can’t lose our transportation system.”
