"We Don't Have Any Idea Of How Many People Are Interested"
As many as 8,700 employees at Southwest Airlines may soon be
without a job... and what's more, that could prove to be a
lucrative decision for them.
In hopes of trimming labor costs, the Dallas, TX-based low-cost
carrier -- which has a strict, albeit unofficial, "no furloughs"
policy -- plans to offer those workers the opportunity to leave
their jobs early, and be compensated for that decision. The package
includes $25,000, as well as continued health insurance benefits
and flight privileges, according to the Dallas Morning News.
Once on the low end of the pay scale relative to other large
airlines, the tables turned after 9/11 when Southwest declined to
follow other airlines in cutting their pay rates. Employees have
continued to receive raises in that time, as well.
That compensation is taking an increasingly bigger chunk out of
the airline's bottom line... and given what the competition is
offering, it makes little business sense for Southwest to continue
paying the higher rates. But cutting pay isn't keeping with the
Southwest tradition, either.
Enter, voluntary buyouts.
"The goal is to reduce our labor costs, but in a very Southwest
way, which is to provide a really nice package that recognizes the
contribution that they've already made to the company, again
keeping it on a voluntary basis," Southwest spokeswoman Beth Hardin
said. "If this is not the time for them to leave Southwest, then
this is still their home here."
Southwest has never furloughed employees since it began flying
in 1971. The airline has offered buyouts once before, however, in
2004 -- and about 1,000 workers accepted them, according to
Hardin.
Offers went out this week to many of the higher-paid support
workers at the airline -- including flight attendants, customer
service staff, reservations, and ramp workers.
No one is being forced or pressured to leave, Hardin stressed,
and the airline doesn't have a specific quota in mind.
"It is voluntary," she said. "We don't have any idea of how many
people are interested."
The plan is to replace those workers who accept the buyout plan,
with new, cheaper hires -- which airline industry consultant John
Pincavage says is a sound strategy.
"I think they're doing what they have to do to continue to
maintain a level of profitability, margins and so forth," Pincavage
said. "If you don't work at it every day, it'll jump up behind you
and eat you, the big cost monster."